When you have a great business idea, you’ll do just about anything to get it off the ground.
When transforming an idea into a viable entrepreneurial endeavor, most budding business owners will require some sort of investment.
This funding can come from a number of sources, and it’s a good idea to know where you stand before committing. To make this easier, we’ll take a look at some of the most common investment streams for small businesses. Keep reading to discover which one might be right for you!
To avoid the complications of external investment, some entrepreneurs use their own savings to start a business. The key benefit of this approach is that it is simply, and liability rests solely with the business owner. There are no external parties to please, and all earnings will be retained by the owner.
Of course, this approach carries inherent risk. If this business fails, the owner is liable to lose all of their investment. Before committing any personal savings to a new business, it is important to ensure that the owner has a sufficient safety net to cover everyday essentials in case of business failure. If you are considering using your personal savings, only invest what you can reasonably afford to lose. Don’t risk your home or your family’s financial security. That said, if you can afford to dip into your savings to fund a business idea, it is by far the least complicated way of getting started.
Investment from friends and family
If you have a relative or friend looking to invest some of their money, or diversify their existing portfolio, it’s a great idea to approach them with your idea. You’ll be supported by someone with whom you already hold a relationship, and your friend or relative may also be able to act as a mentor, if they have business experience.
Of course, there is inherent risk in mixing personal relationships with business, but as long as both parties are honest with one another and enter into an agreement with knowledge of potential outcomes, it is mitigated.
A small business loan
If you are set on retaining full control of your emerging business, but you do not currently have the funds available to channel into it, consider taking out a small business loan. This can seem like an intimidating process, but it needn’t be complicated. Working with a service such as Lend Genius, that connects small business owners with appropriate lenders, makes the process straightforward.
Note that you will be liable to the lender, and it is important that you commit to a repayment schedule that is feasible. If you fail to keep up with repayments, your business and personal finances may be jeopardized.
That said, this approach does allow you to retain complete control of your business. The lender is effectively a silent partner that you repay at agreed terms, set out in advance. This permits your business vision to be realized without investor interference.
Whichever path you choose, we wish you great success in your new business venture!
