Launching a start-up is a dream for many young professionals. Having said that, the freedom of being your own boss does not come without a price. Any idea, however path-breaking, needs sufficient funding and resources. If you have plans of launching a start-up but do not have the resources to convince the bank for a big loan, here are a few ways in which you can realise your dream:
- Bootstrapping the business
Bootstrapping or self-funding is often suggested as the best way to finance a start-up. You can use your own savings, seek financial support from family and friends, sell assets or borrow from any other personal source to launch your dream project. The biggest advantage here would be that bootstrapping usually comes with highly flexible repayment options and low interest rates. On the flipside, it is doable only when the initial costs are limited.
Here is an idea that is fast gaining popularity among aspiring entrepreneurs. Simply explained, an idea is funded by a crowd, in return for rewards, fulfilment of a common purpose, or ownership stakes. Many of these transactions are held over the Internet. In 2015, it was calculated that more than USD 34 billion were raised in different crowdfunding calls across the world. CrowdCube and Seedrs are, for example, popular online crowdsourcing platforms that allow entrepreneurs to draw investments from registered users.
There are start-up challenges held in many countries by public and private bodies to encourage young entrepreneurs. These contests expect the participants to develop a business plan or product and win significant funding for that idea as prize. The media coverage that comes along such competitions is a bonus since it paves the way for better marketing.
Some of the popular start-up challenges held in the US and Europe are TechCrunch Disrupt, Web Summit, 7VPD, Slush, LeWeb etc.
- Small business loans
Many banks and lending institutions offer tailored loans for small businesses. They tend to have lower rates of interest and tax benefits. The entrepreneur need not share ownership of the firm to take such loans.
In case you were wondering how to get a small business loan, look up for details on every lending institution’s website to understand terms & conditions and compare interest rates.
- Government programmes
Many countries understand the importance of having a thriving start-up culture that not only generates employment but also places demand for derivative services like transportation, banking, insurance, telecom and real estate. The government often launches schemes to encourage start-ups in the economy. Find out about such programmes in your country and check if you qualify for it.
- Venture Capital and Angel Investors
Professionally managed corpus, developed to fund companies and start-ups with huge growth potential, are called Venture Capital funds. Venture capitalists invest against equity and leave the company before an IPO or acquisition.
On the other hand, angel investors are individuals, who are interested in being part of upcoming business ideas. Being professionals in their domain, they also bring expert advice in addition to the investment they make.