How to Finance a New Business

Setting up a new business and laying all the necessary foundations down for success is not an easy task. There are so many factors that one needs to take into consideration. Right from the start you have to have a sound business plan and also have a specific marketing strategy figured out. There are many things that will call for your attention right from the start and these are such things as the selecting and appointing of the right suppliers and research into your target market. However, of all the tasks to see to, the most difficult is often the procuring of finance for your new business. Most business owners who have walked this path will tell you that unless you have money to back up your plan, even with good business plans and research, your new business could fail. So, let’s walk through a few options that you have in your corner if you do have that perfect business idea and would need to look at financing it.

Consulting friends or relatives when you start a new business

Consulting friends or relatives that wish to buy into your business venture may very well be a good option. Borrowing money from them to start up and offering them a partnership in the business may be a good way to go for you. You may be surprised to hear that some of the biggest organizations in the market today were started on family capital. Bill Gates set up a deal with his sister where he got to use her computer in return for giving her shares in his future company. This proved profitable for her. Warren Buffet borrowed the start up money for his business from his sister. Today you have Berkshire and Hathaway. As you can see, you would not be the first to make a success from this start.

Liquidate your assets to finance the business

Another choice that you have is to liquidate your assets. After analyzing how potent your business idea is, this may be a viable option for you. Perhaps you own another weekend automobile or have some bonds or stocks tucked away in a safety deposit box. Such assets can be liquidated to raise the capital needed for your new venture. One could also access a second mortgage to finance your business, with a good credit history or a perceived high earning potential.

Bank or other local lending agent

The options mentioned above may be fruitful when one is looking at fairly small amounts of money. But if your capital needs are greater than a few thousand, one may need to approach a bank or other local lending agent. When applying for a business loan in this manner it may be helpful to appoint a business consulting firm. One can follow this procedure on your own, however with a ton of paperwork and many other formalities to fulfill, it can prove to be a time consuming and even harrowing experience. Business consultants offer extensive advice on a comprehensive range of aspects related to business finance. This would include different loan options, taxation procedures, liquidation, accounting and more.

Bridging Finance

One can also apply for Bridging Finance. Perhaps your small business would not need start up capital, but you may need some finance as you bridge the gap in meeting the needs of additional financial requirements. A type of shorter duration loan is available where one needs to pay the capital with the commensurate fee when the period of the loan comes to an end. One can also have a look at a transaction loan. With this loan, one can fund a specific transaction such as a large stock order. With this type of finance one has the most flexibility. Another loan type is the Micro-business loan. This is available to very small business start ups. This means that the application range for this loan is in the range of R1000 to R10 000. One has the choice of where to use this finance and the smaller amount does not put undue pressure on the business finances.

Using a consulting firm to access the right business finance

AFS Financial Services is a consulting firm that can offer vast experience and sound counsel when assisting business owners to explore all the options available to them. AFS is able to assist at every level at each individual business owner’s point of need. Should one need to partner with someone when deciding on loans for asset purchase or for working capital, AFS can walk with you. These kind of loans are available at up to an amount of R250,000. The time frame is set at 18 months and the rate of interest is calculated according to the risk associated with the endeavor. Few fixed criteria come with such packages and this makes it possible to tailor make your package to suit your individual needs. AFS would be of assistance as you look at the tax implications of such loans and ensure that you understand the terms and conditions.

Using a consulting firm will help you to access the business finance that best suits your needs and then will walk with you as your business grows. AFS can offer not only financial advice to its customers but can also provide a variety of other professional consultation services. These range from supply chain management, the evaluation of business systems, process management and many more business needs.