How to Fund Your Business

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NCFA Guest Post | Jan 15, 2018

If you have a vision for a business that you think will do well, then most entrepreneurs will probably say you should go for it. However, there is more to starting a business than just having an idea; you also need the funding to back it up. Getting this type of funding for a new venture can be difficult, but there are many avenues that you can pursue to get the capital you need.

Family and Friends

Seeking to fund your business from family and friends is an effective way to avoid things such as interest rates because you would normally just pay back the amount you borrowed. You could also give them a share of the profits or perhaps make them a silent partner. Some people are not comfortable asking their friends or family for funding in case it affects their relationship.

Bank Loans

Securing funding from a bank is not always a straightforward process because you need to satisfy them that your new venture has the capability to pay the loan back. In the first instance, you will need a strong business plan that contains all of the details about the company and how you are going to create sales. They will also be looking to your projected revenue to see if you will be making enough to repay the loan. The best part of going to the bank is that they will often have business advisers that can help you organize and grow your business.

Crowdfunding

Crowdfunding has taken off over the past few years, with more people looking to this type of funding for their new inventions and projects. The idea behind it is that you submit a detailed plan of what you want to do, and then ask people who visit the site to give you funding to achieve your goal.

See:  4 Important Source of Funding for the SME Industry in Canada

The money can be used to help build a prototype or to pay for you to rent some office space. They have been a hugely effective way for many companies to start their companies. In return for funding the project, those that contribute get an advanced product.

Business Partners

Some business owners will offer to fund for new startups that they find. As with other funding, you will need to discuss your business plan with them before they decide to fund you or not. In return, they will usually come into the company as a partner or shareholder. The good part about this way of funding is that you have someone with experience in business who can help you. Business partners mean extra knowledge – for instance, if you are experiencing Office 365 security concerns, you should find a partner who can help diminish these.

Along with these types of funding, there are other opportunities as well. You can speak to your local government who may have schemes that offer funding to certain companies. Whatever type of capital you manage to secure, they all have to begin with that great idea.

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The National Crowdfunding Association of Canada (NCFA Canada) is a national non-profit actively engaged with social and investment crowdfunding, alternative finance, fintech, peer-to-peer (P2P), initial coin offerings (ICO), and online investing stakeholders across the country. NCFA Canada provides education, research, industry stewardship, networking opportunities and services to thousands of community members and works closely with industry, government, academia and eco-system partners and affiliates to create a vibrant and innovative fintech and online financing industry in Canada.  For more information, please visit: ncfacanada.org

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