The millennial brains are brimming with wonderful ideas. Perhaps, they have got so many challenges in the modern world that need a solution. Coming up with a brilliant idea is not always a big deal. At times it only requires a quick self-engrossment for a person to think the solution of some pressing global issues. Nowadays, youngsters also remain on the look for ideas because they want to become an entrepreneur and become financially successful along with finding the personal fulfillment.
Figuring out where to start and when to start is not such a big task, then looking for where to get the money to finance all those projects.
Here are the tips for how you can finance your business without jeopardizing your financial stability.
Be Clear About Your Idea
Remember, clarity has to be the very first step of every process; it just acts as a roadmap for guiding a path in any journey. As, they famously say once the purpose is clear, half of the trip to a destination is already made. So, make sure you know what is your idea all about and if it is worth selling or not. After you are done with establishing the credibility of your plan you are good to go with looking for the financing.
Look for the Type of Business You Want to Start
Being clear about what you want to create or sell is an essential thing. Thinking of the financing aspect requires clarity about different types of businesses. One must know what kind of businesses are legally allowed in various states, in order to comply with the relevant laws and to attract the investment. While there are different legal types of businesses according to the requirements of the country, let’s have a look at few popular models and their impact on ease of financing.
In simple words, a sole proprietorship means you are the only owner of your business. If you take a loan from a bank to finance your venture, then you are liable to pay the credit. In case you default the bank or creditor will have right to sell your assets which can be your home or your car or the personal bank account to finance the business. One advantage of the sole proprietorship is that you will have right to the business profit which you earn after paying the expenses and interests etc.
The most common funding source for starting a sole proprietorship is to take a loan from banks or ask for family members, friends, and other people in your network to make investments.
It wouldn’t be wrong at all to say that partnership is the type of business arrangement made by keeping in view the business perspective. As evident from the name, a partnership is a kind of business initiated by partners who can range in number from two to twenty. So, once you decide to start a partnership with the funding problem of your business is already resolved, as your partner can also finance the business.
Not, all partnerships are financially beneficial, and you may need investment to start this kind of business as well. Here, your potential financers can be angel investors, banks or other such creditors. A good thing about partnerships is that you are not liable to pay all of your debts, as your partners will also be obliged to do so.
You can make your idea practical by starting a corporation, an entity that holds the interest of many entities including creditors, investors and pioneers who just want their project to be accomplished. In many countries it is easy for corporations to raise funds due to the tax benefits that laws of the country offer. So, if you think that your idea is valid enough to appeal the financial institutes and public then make a corporation and raise your funds from either of these two or both of these entities.
Make a Business Plan
Before deciding to start a business with anyone the types mentioned above, make a proper business plan that explains each and everything from idea to execution. Your program has to be foolproof, mainly when you are looking to raise capital through a partnership or a corporate association or even if you want to take the loan.
Know Which Kind of Business Arrangement is Easy to Finance
Type of business which is easy to finance depends upon the economic conditions and relevant laws of a state. Countries that strategically plan to boost the SME (Small and Medium Enterprises) offer more opportunities for sole proprietorships, partnerships and even small businesses. States that believe corporations to be the precursor of growth provide substantial tax benefits to the corporate business arrangements. Therefore, once you have spotted the kind that occupies a soft corner in the government and regulatory authority’s hearts, you are likely to make a right decision.
Look for Microfinance Schemes
While raising capital and finances becomes quite more comfortable in partnerships and corporations, the legal complexities involved in these types make it difficult to start these kinds of businesses. For youngsters who are not even sure if their idea is likely to become a hit or not, must begin from the sole proprietorships. For this purpose, they must consider taking loans from banking institutions that has microfinance option in their portfolio. Even if you think that funds raised in this way can’t finance your business, you are still good to go with this option in order to give a kick to your business.
Go for Crowd funding
Crowdfunding option to raise finance for the startups is getting much popular nowadays, mainly due to social media which has made it a lot easier to connect with the like-minded people. If you think that your idea holds value for many people then request them to fund it. The process is much natural you need to share the pitch with people to whom the idea matters and you already have massive support emotional and financial support from the community members who feel an association with the project.