Your desire of starting a new business may have a different kind of aim that should be achieved after going through different ways. The most you want to fulfill your target is your spirit of win.
What is essential for your business?
Only a true spirit may not be enough for you to reach your goal. What you need the best is the capital for your business. This is the money that is needed for the rental purpose. You need the money to purchase that huge space that is required for the flourishing of your business. Some new equipment and furniture may be required for you for the furnishing of your office.
Money is required for handling all the professional fees like accounting and legal. For continuing the research work and the overall development of your product and service money is utmost required. You will be able to meet up all the necessities of your employee through this money; their payment will be made by it. So, the money resources for financing your business are also vast, only you have to decide the best funding options out of it.
Different types of money resources
In this article, our focus would be on different sources that supply funding. Here we will study the differences between different types of financing to help you to make your decision what the best option for your company is?
In each stage, your company needs financing from the outside sources. There are different types of funding beneficial for different stages such as:
Seed capital – At the very beginning of your business planning when you do various research works, financing like Seed capital is apt.
Start-up capital – Working capital or Start-up capital is that kind of funding that helps you for the payme4nt of rent, equipment, supplies, etc., in the beginning, stage.
Expansion or Mezzanine capital – Mezzanine capital that is also known as expansion capital, is that funding that will help you for the growth of your company in the subsequent level. This kind of funding helps purchase all the bigger equipment that is also better in quality. This will ensure a larger facility for your office in the business area.
Bridge capital – for the transformation of your funding from the current financing stage to the next Bridge funding, is appropriate. It is the capital that makes the bridges between the gaps.
Know your expenses
The above discussion makes it very clear for you that the different kind of funding plays a very important part for your company’s growth at different stages. But our focus in this particular article will be on start-up capital. In the initial stage of your businesses, you must have the necessity of fund. But these are the spheres where your money will go.
- For your employees and yourself, Payroll and its secondary expenses will be employed.
- Different utilities like electricity, phones, Internet and other communications a big amount of money will be used
- For rental expenditure, your money is needed
- Some money is needed for sales and marketing-related costs
- Money is necessary for various Supplies
- Maintenance work will be done through money
- You will need money for your Insurance purpose
- Money is necessary for the expenses of different Taxes
When you go to launch your own business, you have to be confident about all those expenses that are imperative for your business. You have to be sure that you have enough source of money for this true expenditure associated with your running business in the primary stage. You have to plan for your future when you will have the necessities for a large number of employees for your production. And truly for the expansion and growth of your business, you must have a labor force. This is one of the biggest reasons that many companies fail to have enough working force for their production. But another reason is also very important to decide whether you will succeed to open your own business or not, and the reason is start-up capital. Code Launch performs the role of an incubator for startup companies.
It is shown in many cases that the lack of enough start-up capital has finished the dream of many young businessmen who had the resolution to start their own successful business. But unfortunately, they had no scope of progress in their business just because of this start-up capital.
Who would finance you?
So, you have many references before you. You can study them for your experience. It is very true that you should estimate your financial necessity on the ground of reality. There should be enough space for those unexpected expenses that come without notice. Else you will be out of your business unexpectedly.
Equity capital or debt capital
With the advancement of different level in your business, you would need money. As the money resource, you will have two options. But before you go to decide the source of capital funding, you may go for equity capital or debt capital.
When you choose debt capital, you’ll have a loan on the condition that you must pay back the amount after a certain period of time, with exact interest along with some other charges.
Equity capital, on the other hand, is one kind of funding that is given by those people or companies who wish to be the partial owner of your business and thus they reap their rewards when you become successful in your business. Here the most relevant question arises that is it good for you to give away a certain branch of your company just for the money you need?
It depends on the necessity of cash for you. You may use your personal funds may be the best option for you as the record shows that a huge percentage of small business start-ups get financed with personal funds.
Home equity loan
As recourse of finance, a loan like home equity has a lower risk that may be helpful for your business expansion. The bank authority has no curiosity about where you are using their money; they only demand the fair interest of their money.
You may also think of a personal loan, but you have to inform the bank at the beginning that you have a plan on using that money for your business purpose.
If you are the owner of a simple business, you may start your business with a little investment, you after you have the profit out of it you can use it for the growth. This approach is very healthy that works very well in the service production, here expenses on start-up are very low in most of the cases and you would have no need for employees in the initial stage.