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5 Tips to Raising Funds For a Small Business

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When you're thinking of starting a business, you're sure to have winning ideas to take your business forward. However, being an entrepreneur, you'll be aware that you cannot run a business simply with ideas. The most important power behind a business is its starting capital, using which you can fulfill your initial goals. Before starting a business, you'll have to look for ways to obtain this capital from various sources. Before approaching the financers, you must be able to have a goal in mind for your business, if you can enumerate your goals well and convince them about getting your business there, getting a loan will be easy. These simple steps might be of further help:

* Most entrepreneurs looking for loans will look for bank loans, but it's advisable that you keep a tab on the other options. Looking up the policies of various sectors keeps you well-informed, and will help you to decide on what kind of loan will be most suitable for you. If you don't have much time in hand, resort to the internet. On the internet, you will find all the information you need about the various kinds of loans available in the market and measure their pros and cons. This will eventually make your decision a sound one.

* Many entrepreneurs who are just beginning their venture will want expert advice on the subject. Always remember that even the biggest entrepreneurs started out in a small way. You will be able to evaluate your situation better if you talk to successful businessmen. The easiest way to "procure an appointment" with these veterans is through the newspapers. Many businessmen write columns where they advise on how to get capital, and how to use that capital successfully. So, for better guidance, it's good to keep an eye on the newspapers.

* The most important thing to do, apart from gathering adequate knowledge, is to understand the various ways to procure capital, and which will suit your business best. The following two are the most popular ones:

Equity Financing- this type of funding gives you money as initial capital, but in exchange of that, you have to forgo a part of own ownership in your venture. This kind of capital money is lent out by informal investors. The advantage of equity financing is that you can easily pay back your loan within the stipulated time. There is however, an ill effect of equity financing that worries many independent entrepreneurs. The disadvantage is that many investors will look for bigger stakes in your venture, and will finally want to control a part it. In many cases, the founder of the business loses entire control. This will eventually result in your own business going out of your hands. If you take expert opinion, they will suggest that you look to equity financing only after none of the other options work out.

Debt Financing- debt financing is the most preferred kind of procuring start capital for most young entrepreneurs. For this, all you have to do is approach government banks who will provide a loan for your concern. Here, you have to pay back the debt to the bank. The advantage of this type of loan is that you retain full ownership rights of your business. The interest on the sum is also tax exempted, hence advantageous. However, some entrepreneurs consider the high interest rate as a disadvantage.


ABOUT THE AUTHOR: SIMON JOHNNSON
Simon Johnnson is the director of content for Executive Gift Shoppe. They specialize in business card holders and business card cases.

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