The 10 Ways to Kick Start a New Business Venture in India
Funding the dream business initiative is the most challenging hurdle for every newbie in the business community. Be it starting a dream venture or expanding it, the dynamic economic climate makes it even more challenging.
Therefore here is a comprehensive compilation intended to assist every struggling business person, the 10 ways to finance their business in India.
1. Attracting an Angel Investor
Angel investors are wealthy individuals who fund their own money into companies. However, because of the changing economic climates, the process of finding an angel investor is trickier than expected. Here are some tips.
● Adding an experienced personage to the management team: This overruled the investor's fear of credibility and performance of the team.
● Being Passionate: An investor always measures the commitment the aspiring applicant has to the idea before investing any financial means upfront. It is better to stay clear from following fad trends.
● Exhibiting good market knowledge: To impress an angel investor the applicant must be well versed in the market assessment, competitive analysis, marketing, and sales plan. Expert knowledge would play the odds in the applicant's favor.
Though angel investors prefer to take risks for higher investments, there are certain shortcomings with this form of investment.
● The amount invested is comparatively lesser than other forms of investments.
● Chances of a favoring response from investors are less if the applicant does not have a track record of a successful entrepreneur.
2. Business loan
Many financial institutions have come forward to provide monetary aid to small and medium business enterprises. The interest rates for business loans in India vary from bank to bank and ranges from 8.05% to 24% per annum based on nature, tenure, and amount of the loan.
A government of India initiative under Pradhan Mantri MUDRA Yojana has been formulated to assist SMEs in the nonagricultural sector.
To avail these loans, a company should submit the business loan application to the financial institution. The general details asked are:
● Company name
● Date of creation of the company
● Address
● Operating address of the company
● Firm's email ID
● Contact details
● PAN details
● GST Number
Apart from the details mentioned above, the aspiring applicant will also be required to submit legal and financial information for processing the loan.
3. Monetary support from kith and kin
If the family is completely consigned to the idea of the company and is ready to pool in money, it is an excellent source of investment. However, the monetary details must be recorded down in writing so that it doesn't spoil relationships in the future.
4. Venture capital
Venture capital is financing that is usually invested in business firms that are high risk but have the potential for a mounting growth.
This is a sought after option, especially by startups because of the fairly large investment involved. However, as a return for their investment, venture capitalists might demand an equity share or a majority share in the startup.
5. Crowdfunding
It is a form of taking loans or investments from more than one person. Crowdfunding not helps the firm financially but also puts it ahead in the marketing platform. However, firms should note that it requires crowd-pulling content and product to gain monetary benefits from crowdfunding.
6. Business Incubators and Accelerators
Business incubators and accelerator programs fund new and growing ventures.
Through this investment, firms can create a good connection with mentors and fellow startups of their field. However, this program requires a time commitment from business men or women.
7. Microfinance providers or NBFCs
Since a high level of scrutiny occurs for an obtaining business loan from banks, often odds might not be in their favor. The NBFCs provide provisions for instant loan approval with less collateral. However, the interest rates offered would be different from banks.
8. Credit card
Leveraging money through credit cards can be the most viable way to meet immediate financial crunches. However, in cases of no repayment, the credit score of the businessman will be highly affected.
9. Product presale
Selling products before launch is highly effective but the most overlooked option. It not only enhances sales but also ensures a financial inflow to your business.
10. Selling assets
Selling assets might look like a heart-wrenching option, but it is a quick way to meet immediate financial crunches. Once the crisis is overcome, the firm can repurchase their assets.
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