HOW TO RAISE STARTUP CAPITAL FOR YOUR BUSINESS.

What's       the greatest impediment to beginning a business? For most individuals, the answer is cash. At the point when you
compute your startup expenses and afterward include
in the measure of cash you have to
spread to your individual costs amid the
startup stage, sufficiently getting cash to
begin your new business can appear like an
incomprehensible dream.

Nevertheless hundreds of thousands of
individuals a year do find the money to
start a business. How do they do it? How
do they find the money to get started?
Here are thirteen solutions for financing the
startup of your small business. Some are
nearly risk-free. Others involve
significant financial risk and should be
used with caution.
1 - Start part-time. If you need a
steady source of income to meet your
financial obligations (and keep your
family covered by health insurance) start
the business as a part-time venture.
Don't quit the day job until the part-time
business has a steady flow of customers
and profits.
2 - Start the business from home. You
can start your business for much less
money if you don't have to foot the bill
for office space and utilities for an out-
of-the-home office. While you may not
want to advertise the fact that you work
from home, you will have plenty of
company. According to the US Small
Business Administration Office of
Advocacy , 52 percent of businesses are
homebased.
3 - Get advance commitments for
work. Line up one or two sources of
business before you take the plunge.
Former employers, if you left on good
terms, are often a source of start-up
work, or sometimes funding. Big
companies that can send you their
overflow work or small jobs that they
don't want to do can also provide the
initial stream of work and income.
4 - Get a part-time job. Work part time
and save up your earnings until you have
enough money to start the business. Or,
as an alternative, work part- or full-time
in your own business and take a part-
time job to supplement the income from
your new business
5 - Live frugally - and invest the savings
in your business. You don't have to live
like a pauper or waste hours searching
for 50 cent-off coupons to live frugally. A
few simple changes may save you $200
a month or more.
Depending how much coffee you drink,
for instance, making it at home or in the
office instead of buying it at Starbucks or
Dunkin Donuts could save you $10 or
$15 a week. Bringing your lunch to work
instead of ordering it out could save you
another $20 or more a week. Eating a
home-cooked meal instead of bringing
home fast foods or eating out on week
nights could possibly save you yet
another $20 or $30 a week. Turning
your thermostat down a degree or two
during the heating season, and turning it
up a degree or two when you have the
air conditioning cranking away will save
you significant amounts of money during
the year. If you're determined to save
money, you can probably find a lot of
other ways to cut back on your spending.
6 - Use a credit card. Using a credit card
- if you have good credit - is the easiest
way to get money to start a business.
Equipment, suppliers, advertising and
postage (for mailings) can all be
purchased with a credit card. And if your
credit card gives you a line of credit, you
can give yourself an instant loan (up to
your credit limit). But using a credit card
to start your business bears some
significant risk, too. If you're not careful
you can quickly run up a huge credit card
bill - a bill you'll be responsible for paying
whether your business is successful or
not.
7. Apply for a micro loan . Microloans
are small loans,available through a
variety of resources including community
sources, online lenders and peer lending
groups. The size of the loan, eligibility,
interest rates and terms vary according
to the source.
8 - Consider crowdfunding .
Crowdfunding sites make it possible to
raise small amounts of money from a lot
of people if you can interest them in
your project or business. A word of
caution: Remember that crowdfunding
makes the idea for your business product
or service public. If you need to keep
your idea confidential, don't use
crowdfunding. Talk to an intellectual
properties attorney before publiciing
anything that is unique and potentially
patentable.
9 - Apply for a home equity line of
credit. Some banks offer home equity
lines of credit that let you borrow up to
as much as 75% of the appraised value of
your home. Depending on the value of
your home and what you still owe in
other mortgages, that can put a
significant chunk of money at your
disposal for starting your business. The
downside: you're putting your home at
risk. If the business fails and you can't
repay the loan, you could lose your
home. If you decide to go this route, be
sure to read the Federal Reserve Board's
information about home equity lines of
credit.
10 - Apply for business loan instead of
a home equity loan. Information you'll
need to give the bank includes the:
purpose of the loan, projected opening-
day balance sheet (new businesses),
lease details, amount of investment in
the business by the owner(s),
projections of income, expenses and cash
flow, signed personal financial
statements and your resume. You may
also need a formal business plan. (If
you're trying to get funding to grow a
business you've already started, you'll
also need business financial statements
for the last three years, and information
on receivables, payables, and outstanding
debt.) Don't be surprised if the bank
turns you down, though. Banks are often
leery of lending money to startups. For
more information on bank funding, see
our articles about getting business loans .
11 - Ask Your Bank About an SBA-
guaranteed loan If the bank turns you
down for a business loan, ask them if
they'll consider your loan through the
SBA guaranteed loan program. If they
agree to do so, they'll forward your loan
application and credit information to the
nearest SBA district office, for a decision.
12 - Borrow from family and friends .
Family and friends are a frequent source
of funding for small businesses. But
remember, you have to live with your
family for a long time - and you probably
want to stay friends with your friends. So
don't borrow from unless you have a
business plan and have done enough
research to know there is a market for
what you want to sell. Be sure your plans
provide a way to also pay interest on the
money borrowed from family and
friends.
13 - Look for angel capital groups in
your area if your business has the
realistic potential to grow to a significant
size, (Your local SBDC or SCORE office
may be able to point you to a group in
your area.) You'll need a business plan
and be able to prove that you have the
experience to run the business and the
business will make enough money to
make the investors a nice profit on their
investment. Learn what angel and
venture capitalist look for in our section
on finding investors .
14 - Consider applying for a loan
through peer lending sites like
Prosper.com and Lendingclub.com
15- form a partnership deal with people
who are interested. To raise capital to
start a business, each member of the
partnership pools in money and resources
and they act as partners.
LAST ADVICE
It is always better to
overestimate your expenses than to
underestimate expenses for a new
business. Investments in a new business
are not only material cost but also
employee payrolls, business
administration and research and
development. Hidden costs are there in
every business which cannot be
estimated when you raise capital to start
a business. You should raise capital to
start a business so that you are not short
on your expenses.
You should depend on different
investments to raise capital to start a
business so that you are not short on
your funds and can manage your expenses
well. Your initial investment in your
business should be enough to give you a
comfortable hold on your business.
Shortage of funds will lead to incomplete
projects. Therefore, plan out your
expense and raise capital to start a
business properly. The failure of a
business is caused due to improper
planning and financial crisis. Remember, it
is your idea and your business venture.