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When you start a new business the first source of financing you should go to is yourself. Do you have money
in the bank, assets placed in buildings or diamonds?
If you believe in your venture you should use your own funds first. If you
don't, it will be difficult to borrow money elsewhere.
Many entrepreneurs have little money so they have to go elsewhere for
funding.
Families and friends
Family and friends can be a good source of financing, especially in the
early stage of your business when relatively small amounts of money are
involved.
Several small amounts
Consider borrowing from several people rather
than trying to get it all from one person. This way, you can ask for an amount
from each person based on what they can afford to give you, and not on what you
need.
You could:
- Write down the names of everyone you know, regardless of how remote the
relationship. This might include family, friends, colleagues, mentors,
teachers, neighbours, your dentist etc
- Circle the names of the people who have some insight into your character
and/or personal and business skills.
- Think about a realistic amount of money each person might be able to
lend you, and write down that amount next to their name.
Several small amounts
When approaching someone you know for money, it
is important that you have made a written loan proposal. It should be backed up
by facts and figures. If you are just asking for the money is practically a
guarantee that you will be turned down.
Would you not do that yourself?
Be realistic and professional. Your business plan is the proper tool to
persuade your friends and family.
- Go to Sourcing from a Bank
Download free templates
- Download templates to help your start-up
Copyright © 2009 Dynamic Business Plan 21-05-2012
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