Many people are loaded with many business ideas. The challenge comes in when you don’t know how to put your ideas into a practical business. One of the challenge is how to obtain some capita to start the business. In this article we are going to cover some of the ways to obtain capital to start small business.
- Money from Savings
The main source of capital for any startup business is from personal savings. Savings can be defined as a regular accumulation of some funds within a given period of time. Once you plan to start a business, set aside enough finances to cater for operational expenses in the first year of your business. This is because, your business may fail to record any profit for the first six months. For service-based businesses, setting aside three months operating expenses may be okey to go, according to FreshBooks.
There’s one common factor all these businesses need to start up: money. Raising enough funds is critical to get a small business off the ground and pave the way for longevity and future success.
- Money from Credit Cards
You can decide to get capital from either your personal or else you open a business credit card. Choose a credit card that attract the lowest interest rate, with a favorable repayment period. Some credit cards may attract a high interest rate. You may end up having a huge debt than you had planned and this may cripple your business.
- Borrow money from family and friends
You can borrow money from your family members and friends. You should be clear of how much you need. If you require to return the money in future, put it in writing. Determine the interest rate to pay when the loan will be repaid. Doing this will reduce some conflict with your family members and friends.
- Money from Bank Loans
Though it may not be possible for small businesses to obtain loans from bank, you can approach them with a well-prepared business plan. Banks will require your financial history. You can opt to use your personal bank since they are familiar with your financial history.
- Government program
Government may offer some grants to entrepreneurs who are willing to start businesses. You then need to do some research to find out the right one for you.
The government may also provide some loans to business people with a lower interest rate compared to banks. It will also offer a friendly repayment period. This is a good opportunity that cannot strain your business financially.