Raising money to turn your business idea
into a business is one of the biggest challenges every entrepreneur will have
to face. We have listed some popular ways entrepreneurs raise money to enable
them turn their ideas into businesses.
Family and Friends
This is usually one
of the easiest means. You can ask your family and friends for money. Do not
forget you should have your business plan at this point so you can give a clear
explanation about what you are selling, how much you are selling, how you plan
to make money and whether you need a loan and investment or a gift, how you
plan to pay back if it is a loan and how much they should expect.
Also known as
personal funding. This means financing your start-up from personal savings,
credit cards or any other personal means of finance you may have instead of
borrowing. Some entrepreneurs start with this method, until their business
becomes profitable, and they feel the need to expand and then use other means
to finance the new growth.
This is also known as
crowd financing. This means having to present your business idea on a crowd
funding website to a group of people and raising small amounts of money from
them at the same time to fund the business idea and turn it into a business.
How it works; you present your idea to a crowd of people by posting it on the
website and your proposal will convince potential investors and offer them
ownership in the business if they invest.
This are successful
and wealthy business like professional lawyers, engineers, accountants. Some of
them are wealthy from businesses they own and are experienced entrepreneurs.
They are known as “angles” in the business world because they are the easiest
means of raising capital compared to others.
Angel investors also
provide mentorship and coaching which is very important for young businesses.
Angle investors can
be people you know or are recommended to you by other people.
is important for any start-up to have a business plan. A business plan usually
contains the different start-up costs for the business and these start-ups cost
which are the expenses incurred in the creation of a new business, so it is
important to capture this early on.
businesses are not the same and so different businesses require different kind
of start-up cost. Online businesses for example would require a different type
of start-up cost to a business that exist both online and offline
(brick-and-mortar). A clothing store will have a different start-up cost when
compared to a book store. However, here are some elements that can be common in
Market Research expensesInsurance, license and permit feesEquipment and supplies expenses Advertising/ Marketing and promotionsBorrowing costsEmployee expenses
7. Office space