How to Get Capital To Start A Business

how much capital to start a business

Having a great idea is a good start to opening a business, but to turn your idea into a reality you will need capital to get up and running. It can be difficult to attract investors and lenders to a new, unproven business. Plan your business and approach individuals and banks properly to overcome this hurdle and find capital for your business.

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Write a business plan that gives a summary of what the business will be and how it will operate. Provide a breakdown of your start-up costs and your required financing over the course of a couple of years. Include your expected revenues and expenses for the first year of operation. Also, provide information on your target market and marketing strategy.

Invest your own money in your business before seeking other sources of capital. Investing in your own business shows that you have confidence in it. Investors and lenders will be reluctant to put their money into any business if the owner is not willing to put some skin in the game as well. You can use your savings

as well as personal loans as a source of initial financing.

Ask friends, family and anyone else who will listen to invest or lend money to your business. Present them with your business plan. Explain how much equity you are offering in return for their capital if you are asking for an investment, or the terms of repayment if you are asking for a loan.

Apply for a business loan. To obtain a business loan you will likely need to offer some form of security, guaranteeing the loan for the bank. This usually takes the form of a personal guarantee to pay the loan using your own personal assets if your business goes bankrupt. You will need to present the bank with a copy of your business plan as well as personal information.

Seek financing from angel investors. Angel investors are individuals, usually entrepreneurs themselves, who invest in start-ups. Present your business plan to angel investors and offer them an opportunity to buy into your business. In addition to offering capital, angel investors can lend experience and expertise to help your business grow.

Source: www.ehow.com

Category: Personal Finance

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