Obtaining Finance – In our previous article- Planning Your Business- we talked about your business plan and this is a reminder that your business plan is an important part of seeking business funding.
Managing your finances efficiently and effectively is critical to the ongoing success of your business (i.e. accomplishing the objectives of your business). When you start out, you need to know three things when it comes to the financial management aspect of your business;
- How much funding do you need to get your business up and running?
- Where are you going to get the necessary money? And
- How exactly are you going to manage your financial arrangements?
I believe in obtaining the finance you should start by seeking funds from one of the sources below;
- Getting a loan from a bank or other financial institution.
- Using your personal savings which we hope are enough.
- Borrowing money from friends and relatives; be careful with this one.
- Chattel Mortgages (i.e. a mortgage on a movable item of property).
- Finance Leases or Capital Leases (a finance company is typically the legal owner of the asset during the duration of the lease).
- Venture Capital (VC), the venture capital firm gives funding to your start-up company in exchange for equity in the start-up.
- Government Funding.
- Crowdfunding (raising small amounts of money from a lot of people). The more people you impress with your idea, the more money you get but be careful with this option because it makes your idea public.
- Angel Capital groups.
- Trading equity/services: A common example I’m familiar with as a computer engineer is trading my services (i.e. supporting the computer systems for all other office tenants) for a free office space.
For Chattel Mortgages:
For Finance Leases:
For Venture Capital:
A very useful links to have a look at related to this topic:
For Angel Capital Groups:
Obtaining Finance – Self-Reflection and Affordability
It is very important to perform an honest self-assessment because investors need to know everything about you and your idea; your motivations, your goals, how committed you are to the venture and why will you be able to do what you promise to do.
Finding others who believe in your idea, and are willing to provide the capital for you is one of the most difficult aspects of starting-up a business. I hope we have given you some tips to help you with this part of your journey.
Remember that your feedback and participation is highly appreciated.
We wish you the best of luck with your venture.
Ensure you have read the complete series to maximize your chance of success:
Part One - Business Startup Australia – Introduction Part Two - Business Startup Australia: Getting Help and Support Part Three - Business Startup Australia: Business Structure Part Four - Business Startup Australia: Business Plan Part Six - Business Startup Australia: Registering Your Business Part Seven - Business Startup Australia: Registering Business Name Part Eight - Business Startup Australia: Understanding Australian Taxes Part Nine - Business Startup Australia: Home-based Business Part Ten - Business Startup Australia: Online Business Part Eleven - Business Startup Australia: Employing People Part Twelve - Business Startup Australia: Workplace Health & Safety Part Thirteen - Business Startup Australia: Online Marketing Part Fourteen - Business Startup Australia: Securing Your Online Business Part Fifteen - Business Startup Australia: Importing Part Sixteen - Business Startup Australia: Exportation
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