More than thousands of companies start every year in almost every country. But do all among them survive in the market? Are they able to grow? The answer is definitely NO. In spite of having a good business plan and good product/service ideas, not all startups are able to grow or even exist. According to a recent study 94% of the new business fail within the first year of their start. The reason behind this failure is ‘Lack of Funds’. A business is equivalent to a vehicle which needs capital/ funds as a fuel to run. Even the businesses having a proper business plan and guide can’t do anything if the fund factor is lacking. In this article we are providing you the ideas from where you can arrange funds for your growing business.
5 Ways to Finance Your Growing Business
If you have a good plan for your business and are not able to carry on the work according to the plan because of lack of capital then Private Investors are the one who can help you in this situation. You can go an investor who is ready to invest in any profitable business. Show them your business plan and give them a proper and accurate details about your company. If you plan have the potential to make profit then they will surely invest in it.
Get Venture Capital
Venture capital is financing a business through investors. Generally this is provide to small and start-up companies and businesses who are willing to get fund from outside. But the companies who are believed to have potential along with the long term growth can only get this fund. Venture Capital basically comes from progressive investors, investment Banks and any financial institutions. They don’t only provide just a monetary support but along with this technical or managerial expertise can also be provided by VCs.
Although it can be risky business for the investors to put up the funds in a business, the potential of the business is the only attractive payoff. For new and small companies who have limited operating time such a year or two year, fund through venture capital is increasingly becoming popular among them. VCs fulfil the lack of capital in the case when companies lack access of capital. Loan from banks and other financial instruments can also be opted. One of the main downside is that the investors get equity in the company.
Government Programs That Offer Start-up Capital
Government of India has also launched many programs to support start-up and small companies. The major reason behind this step is small and medium enterprise contribute to more than more than 50% of the country’s GDP. Even many schemes has been introduced specially to support women Entrepreneurs. Government started ‘Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRA)’with an initial cost of INR. 20,000 crore to extend benefits to around 10 lakhs SMEs all over the country.
Stand-up India is also one of the scheme by Indian government to support Women and SC/ST Entrepreneurs who have good plans and willing to do something in business.
The benefit of financing your business through these government plans is that you don’t need big value collaterals and repayments of these borrowing starts after one year that too at low interest rates.
Business Credit and Trade Lines of Credit
In business, much same as everyday life, it is a smart thought to build up credit early and to build up a reputation of being dependable and unsurprising budgetary conduct. One of the initial steps to building business credit is opening at least one business financial records. You need to be careful to keep a satisfactory trade save out your records. Some credit scoring frameworks factor in your bank rating which considers your normal bank adjust while calculating your score.
Business Loan from Bank
This is considered best option in terms to get loan for a business. Banks are always ready to lead you but you need a good business strategy to get a loan. They will lend you the amount seeing your repaying capacity and many other things such as CIBIL and all.
Beside all these things lending money from banks considered best because unlike the private lenders banks do not share profits of the business. Hence by borrowing money from bank you can invest in your business and earn profit without having it to share with the bank. For the lending Banks will charge some interest which you need to repay along with the principal amount through EMIs in a fixed tenure period which can be a maximum of 20 years. Even the option of part payments and pre-payment is also available with some banks.