Raising money to turn your business ideainto a business is one of the biggest challenges every entrepreneur will haveto face. We have listed some popular ways entrepreneurs raise money to enablethem turn their ideas into businesses. 1. Family and Friends This is usually oneof the easiest means. You can ask your family and friends for money. Do notforget you should have your business plan at this point so you can give a clearexplanation about what you are selling, how much you are selling, how you planto make money and whether you need a loan and investment or a gift, how youplan to pay back if it is a loan and how much they should expect. 2.
Bootstrapping Also known aspersonal funding. This means financing your start-up from personal savings,credit cards or any other personal means of finance you may have instead ofborrowing. Some entrepreneurs start with this method, until their businessbecomes profitable, and they feel the need to expand and then use other meansto finance the new growth. 3. CrowdfundingThis is also known ascrowd financing. This means having to present your business idea on a crowdfunding website to a group of people and raising small amounts of money fromthem at the same time to fund the business idea and turn it into a business.How it works; you present your idea to a crowd of people by posting it on thewebsite and your proposal will convince potential investors and offer themownership in the business if they invest.
4. Angel InvestorThis are successfuland wealthy business like professional lawyers, engineers, accountants. Some ofthem are wealthy from businesses they own and are experienced entrepreneurs.They are known as “angles” in the business world because they are the easiestmeans of raising capital compared to others. Angel investors alsoprovide mentorship and coaching which is very important for young businesses. Angle investors canbe people you know or are recommended to you by other people. Itis important for any start-up to have a business plan. A business plan usuallycontains the different start-up costs for the business and these start-ups costwhich are the expenses incurred in the creation of a new business, so it isimportant to capture this early on.
Allbusinesses are not the same and so different businesses require different kindof start-up cost. Online businesses for example would require a different typeof start-up cost to a business that exist both online and offline(brick-and-mortar). A clothing store will have a different start-up cost whencompared to a book store. However, here are some elements that can be common inmost start-ups. Market Research expensesInsurance, license and permit feesEquipment and supplies expenses Advertising/ Marketing and promotionsBorrowing costsEmployee expenses7.
Office space8. Communications9. Website