Need to Know About Financing for Entrepreneurs

According to Alan Safahi, a professional entrepreneur and experienced businessman, one thing that gives every entrepreneur a headache or heartburn is financing their business. Getting money is one of the most challenging things people face in the business world.

Safahi says numerous challenges come from the inherent value of money. Financing depends on the type of business. For example, a traditional small business can generate revenues in one to three months, making it different from a startup that requires one to three years to even make a product. Read on!

Personal Savings

Most entrepreneurs put their own money or savings into their bootstrap themselves. Although this is a common method to finance a small business or startup, it is risky because you don’t know whether your business ideas are valid. Investing your personal savings into business is difficult if you don’t have enough money to run your day-to-day tasks.

Business Partners

Pooling your money can reduce the risk of your new business. Like family and friends, you can have a business partner to finance your company. However, you must define the role and responsibility of your business partner.

According to Alan Safahi, most businesses implode due to partnership issues because entrepreneurs fail to define their roles and responsibilities. At the same time, partners’ goals do not align with your business vision and mission.

Micro Lenders

Microlenders are similar to banks. However, they gave out smaller loans to businesses, not more than $50,000. You can find groups that lend to entrepreneurs. However, microlending has higher rates due to increased risk potential. Safahi says microlenders are not ideal for entrepreneurs looking to establish and scale their businesses.

Banks

Banks are conservative regarding lending practices and require collateral before issuing the loan. According to Alan Safahi Orinda, banks are an ideal choice for established entrepreneurs or businesses with excellent credit scores.

Angel Investors

Angel investors are high net worth people and usually invest in new companies, particularly startups that focus on developing new technologies. Angel investors typically make money via a startup exit. However, it is ideal for entrepreneurs to secure a suitable loan and start a business.

Strategic Partners

Strategic partners are profitable businesses interested in buying your product or service. These companies invest in products or services, and their investment exit is secondary. If your investors want to exit, a strategic product focus will conflict with it.

Things To Ponder

● Find out the type of funding for your business idea and list the funding sources. Figure out the selection criteria for funding.

● Select a startup company that recently got funded. Find out who funded it.

● Interview one of the local business owners and investigate how they started their companies and what methods they used to finance their companies.

● Talk to your bank and determine what they offer regarding loans.

● Perform thorough research, collect data, and analyze it to generate valuable insights to make informed decisions.

Originally Posted: https://safahi.com/everything-you-need-to-know-about-financing-for-entrepreneurs-984711e767c9