Many New Entrepreneurs wonder about the matter of raising money. Where to find funds? How to proceed from the concept to the realization? Great entrepreneurs have taken the mystery out of this step. Through my research and personal experience, I have identified the top ten ways to get the capital you need to finance your project. In the following short guide, I will give you the easiest and safest way for you to get started.
The means that I will propose will allow you to reach your goal. You will also have that secret process, which is common to the greatest entrepreneurs in the world.
● SEEK FOR CAPITAL PROVIDERS.
Here, it is a question of convincing people, capitalists with your project. These people that we call “business Angel”, have enough money that they can invest in your project. Thanks to this method, these people who have been Apart from the money invested, the business Angel also acts as a mentor and supports you during your evolution. The coaching of these successful entrepreneurs is also an added advantage with this system.
This is financed by the community. Crowdfunding is often the hallmark of non-profit organizations. But entrepreneurs also use this approach to find funds. It consists in announcing a project to a large number of people and collecting money from them. These people benefit from your project afterward. There are specialized platforms that make Crowdfunding easier. The best in the field are October, PrêtUp, Crédit.Fr
It is about competitions where the winner of the best project is selected to be awarded grants to carry out his project. For these competitions, it is a question of convincing a jury thanks to its project. What innovation does it bring? What are the problems it solves? What is its ecological impact? These are questions that help to distinguish the best projects from the rest. The rewards for the winner can go up to a million euros. Thus, the project owner benefits from the contribution of the incubators so that his project can be born. There are several types of these competitions around the world.
● THE LOAN
Banks and microfinances are institutions that can be a source of capital for your project. These institutions lend you money that you commit to pay back with interest within a certain period. Lending at these institutions is very difficult to conceive. Banks prefer to lend to projects that are already in place rather than to ideas on paper. They don’t want to take any risk of not being repaid. For them putting money into a structure that is already up and running makes more sense than putting it into a project that they have no guarantee will be a success.
On the other hand, many entrepreneurs do not advise too much for a beginner to ask for these financial institutions. At the risk of getting involved in a spiral of debt in case, the project is a flop.
● THE PRE-ORDER
It is used more in the production and service field. It is very difficult to achieve, but it is very powerful. You have to convince the customers that they need your service or product without showing them anything concrete. They should be inclined to give a percentage of the product and the rest after they have received the product or service. For example, if you want to produce detergents and you don’t have enough capital to start production. People who are interested and convinced of the quality of these future detergents make orders. With the money from these orders, you can make the first productions and sell it to them. From the realized profits, you can now make other detergents. The challenge is to be very persuasive and be able to get people to pay for a product they haven’t seen.
● SUPPLIER CREDIT.
Also a good way to get your project off the ground. In the case of production and service, you have to get an agreement with the supplier, the one where you can find the raw materials for your product. You manage to convince him to let you have the material for free. When you have sold the product, you pay him back the price of his goods. For example, if you want to create a line of underwear. The supplier lets you have the fabric on credit and after the product is sold, the supplier collects his fabric money.
● LOVE MONEY
It is the financing by the family. It is your family that puts money into your business. It’s a loan that your family makes to you. So the people involved are eager to see the results of their money. The downside with love money is sometimes the strain of family that doesn’t help.
● THE LOAN OF HONOR
This is a grouping of entrepreneurs who will lend you money at almost zero interest and who will support you. It is more frequent in Europe, particularly in France, with associations such as “Entreprendre” which can lend up to £10,000. There also have the “Crédit Commercial Canada” which also grants loans. The other benefit is that you are surrounded by experts who follow you in your advancement.
● THE TONTINE
Much more present in Africa, it is a system of rotating contributions. In a group of 5 or 10 people who contribute for a third person in the group. It is like a loan that is made to this third person. Afterward, this person also contributes to the other members of the group. If you have a project, this is also a way to find funds.
As promised, I will finally unveil the secret method of the most successful entrepreneurs.
● THE SELF-FINANCING
As the name implies, it is about investing your own funds in your project. After determining the amount of the project’s expenses, you must start by saving and putting aside money to make your idea a reality. This technique is the most recommended because there is no risk of debt. It is the most adopted method by entrepreneurs. It is also the best way to prove your own worth. Several big companies were born from personal funds. In this list, we can mention GOOGLE, AMAZON, MICROSOFT, FACEBOOK, etc. For the young entrepreneur who is just starting, self-financing is the most efficient way to go. Who knows, maybe you will be the next Mark Zuckerberg.
Knowing one of these methods does not mean that you will get the financing for sure. Self-financing is the most recommended way. Starting your business with your own funds has real advantages. However, other sources of financing also have their advantages. In case you are overwhelmed by the choice, you can always use different ways and find the one that suits you best.