It’s possible to start your business without a lot of capital, particularly if you are freelancing, working from home, or doing business online.
However, it is important to assess your funding needs, including assets like a laptop, stationery, or inventory – as well as the amount of cash flow you will need to keep you afloat until your business is making a profit.
Remember, small businesses can get started without a lot of assets and inventory. You don’t need to buy everything you want at the very beginning. Find a way to start as low cost as possible.
Consider working part time when you launch your company. This will give time to build your business with less risk and provide you with a steady cash flow from another source. Once you’ve established a base, then transition to full time business ownership.
It is also important for you to have fully developed and tested your product or service. Ensure your product or service is as complete and ready- for – market as it can be before marketing it or seeking financing.
There are several finding options and they include
Bootstrapping, Crowdfunding, and Microloans, these three different financing options that might work for your needs.
Instead of seeking external investors, entrepreneurs with very limited capital can find the funds to startup by reaching into their pockets and pinching together a mixture of supplemental income, savings. As with any financing option, bootstrapping your business has its pros and cons.
Pros: Many entrepreneurs choose this route because they do not want their business to be defined by the demands of external investors and microfinance bank agents.
Cons: At the same time, bootstrapping is risky – your personal savings and debts may be at risk.
Crowdfunding is a term used to describe a network of people who pool their money andresources together, usually via the Internet, to support efforts initiated by businesses.
You are probably familiar with popular rewards crowdfunding sites such as Kickstarter and Indiegogo. This is probably the easiest way to get started in crowdfunding and can be a good tool to gauge customer interest as well.
The other types of crowdfunding that may be useful to your business are debt crowdfunding (also called peer – to – peer lending) and equity crowdfunding (where your funders actually take a stake in your company and its profits).
- Relatively quick and simple to set up
- Can help you gauge interest in your business idea, particularly if it’s a unique idea
- Can be a very cheap form of financing
- Rules can be confusing
- Can be difficult to achieve fundraising goals
- Often, if you don’t reach your goal, you see nothing in return for your work
Microloans are small, short term loans for small businesses. Microfinance banks, co-operative societies provide the option of getting microloans with interest rates. Microloans are actually designed to help you fund your business and you are expected to pay back within the stipulated time.
- Ready made cash
- These lending institutions also provide guidance on how to run your finances
- High Interest Rates
- Hoarding, especially for Microfinance banks, their agents practically hoard you to produce their money.