The start-up stage of a business is the phase in which business plans and financial plans are formulated. This is the stage when you have decided to start your own business; you have been brainstorming about your product and how you will reach your customers. The ideas are coming fast and furious and you realize that at this stage of the game everything is possible, and all you really need is ... financing for your dream project.
The key to a successful business start-up and expansion is your ability to obtain and secure appropriate financing. There are lots of creative ways to go about financing your start-up. But the whole process could be broken down into a few easy steps, and as you tackle each one you will have more time to spend growing your business and less time worrying about how to finance it. Generally speaking, you have either of the two ways to finance your business:
Financing your business through savings. If you are leaving a lucrative job to start a business, you may be able to stash away some money before you leave.
If that's not an option, consider borrowing. You can borrow from banks, venture capital firms - anyone who'll offer you funding at a reasonable interest rate.
For starting your business and getting it financed you need to have a business plan - a calculation of how much you will need, how you plan to spend it and how much you will have to sell to be profitable. Take your plan to your potential lenders. Remember that financial investors in start-up ventures generally focus on the potential for substantial gains from the rapid appreciation of the value of the new venture. Realization of such gains comes with the equally high risk of failure in a competitive marketplace.
Financial investors in new ventures present different profiles. The angel investors invest to promote the “early stage” or “seed stage” of a business whereas venture capitalists invests because their primary business is to finance new companies. Once you get the money, you can refocus on starting the business - with one caveat: Keep an eye on your expenses at all times and make sure you have enough for the long run, not just for the next few days.
