Business Startup Costs – How to Find Sources of Funds
The main stumbling block we face when starting a business is finding funds. Start-up costs for the business in most cases exceed the financial capabilities of the entrepreneur. One quality of a successful entrepreneur is risk taking. I have to be brave enough to venture into a business that requires capital that is more than my personal savings. Fundraising is not a difficult process, but a complex one.
A business plan is an important tool when looking for funds to cover start-up costs for a business. A well-crafted plan is used to convince both investors and financial institutions that the proposed business is viable and that their money will not go to waste. A financial analysis of how the entrepreneur plans to repay the loan should be provided if aid is granted. Common providers of business finance include the government, NGOs, commercial banks and other financial institutions. We can also approach private investors, but in most cases they would like to partner us in business, which may not be such a good idea for all of us.
No one source is rightfully superior to the other. What we need to consider are the terms of the loan. Compare the interest rates charged and the repayment period of potential financiers, then choose the most favorable one. Unless we want to limit ourselves to small commitments, it is highly unlikely that as entrepreneurs we will be able to cover all the start-up costs of a business. When external financing is a prerequisite, a business plan is an important help when you want to supplement your own savings.
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