DIFFERENT WAYS TO ARRANGE MONEY FOR YOUR BUSINESS

Dr.D.Sathishkumar, Professor, SIMS

            MONEY is important for all business. Money is the element to start and run the business successfully. Entrepreneurs find ways to arrange money for their business. Some of the ways that an entrepreneur seeks to fund his business needs are given below.

Self Funded: Easy and Best way of starting up and being an entrepreneur is your own money. Your personal money has no strings attached to it and you can very well do what you want to. Self funded is through personal savings and no limitations for investment.

Bootstrapped:   When the Business is running in self funded, entrepreneur may choose bootstrap. This happens when the entrepreneur uses the cash generated by the business to keep it running and grow the business. This is an ideal way to run a business, the entrepreneur keeps complete control of the company and no charges to be paid for the investment.

Friends and Families: One more opportunity or method to raise fund is from their friends and families to start their business. This allows with a greater sum of money, without losing the control of the company. Similarly no charges or interest to be paid for the amount he has raised.

Angel funding: First level of institution investment, An angel investor is who funds a business for the equity in the company. Two or more investor joins hands to invest a large amount in a small company.

Venture Capital: Venture Capital generally comes from Angel investors with bigger cheques. Bigger amount at their disposal to invest and hence can help a business in providing the necessary money to scale up quickly.

Banks: Banks have been the traditional source to fund rising for small business and continue to play a crucial role. Before Venture capital, to raise funds banks were the only institution to source finance for small businesses.

Alternate Source of Finance: Alternate source of Finance is becoming popular in last two to three years. Alternate source of finance is P2P (Peer-to-Peer), Entrepreneurs who struggling to raise money from banks and other sources P2P is the alternate source for Finance. Individual lenders extend money as a loan to small businesses through online portal.