How to attract other people’s money
You can attract other people’s money to start a business from scratch. The sources of such finance will be a partner, an investor, sponsors, and a winner in a competition of entrepreneurs.
Find a partner for joint business
The partner – the one who will be among the managers of the company, will take an active part in the management and current activities. Business shares are divided between partners based on their contributions and the degree of participation.
The rights and obligations of partners and investors are distributed at your discretion. It is possible to agree with the partner that he will not manage the company, or, on the contrary, to involve him in the work. The main thing is to allocate roles, responsibilities and shares in the business with all those who invest their money in the project.
Partners who will enter your project with their own money and forces, you can look for among friends or on Internet forums, online platforms for startups. Chat, make friends, talk about your idea and look for like-minded people. This way you can assemble a team to implement your project.
Who is the right partner for your project?
It is better to choose partners for standard projects, for example, opening of a coffee shop, hostel, shop, car workshop by several co-owners. The risk is not as high as with a startup, this format of business is already in the market and it is easy to predict where the revenue will come from and how quickly the revenue will appear.
Such cooperation will help to decide where to take money for business without credit: among colleagues, friends, relatives. Each participant will contribute part of the money and will be given their responsibilities: to communicate with customers, promote the site, produce goods or provide services.
When you should not look for a partner
Do not take risks if you have a microbusiness: with its possible division, everyone will want to take a high salary, the income of a small company may not be enough for several partners – and you will quickly get into the negative.
Attract an investor to finance your project.
The investor contributes money and helps with resources, but does not solve the current tasks in business. He has a stake in the company or in profits, so he receives a situation report, influences management decisions and controls the overall development strategy. Determine what the responsibility of both parties is in the contract.
Investors can be found among the funds and on specialized online services, in contests and reality shows for beginners businessmen. Your idea can be noticed and financed by both private investors and venture capital companies – companies that provide loans to start-up entrepreneurs with good potential for quick return on investment and profit.
Who is the right person to find an investor
Searching for an investor will solve the question of where to get money for the startup, when you have invented a new technology, found an interesting idea for production, plan to develop a unique service or mobile application, launch a social project. It is difficult to predict financial results, but the idea can bring money if you invest in its implementation.
When it’s not worth looking for an investor.
You don’t need to look for an investor to start a simple business: you will work with your own hands, the investor – get part of the profit. This will quickly get tired, because you have all the basic work to do, and you still have to share the profits and report.
In this situation, it is better to take money to start a business in a bank: it is easier to repay the loan with monthly payments than to pay off the investor in full.
Take advantage of crowdfunding.
Crowdfunding is a financial support from ordinary people who like your idea. If potential customers and like-minded people have invested in your business, they should be thanked materially or immaterially.
Sometimes the financing is in the form of collection of payment for pre-orders. In other cases, there are separate rewards and bonuses, for example, souvenirs with the logo of the project, dinner with the organizer or a guest star, the name of the sponsor on the products.
For crowdfunding campaigns there are specialized platforms, which help to attract money for business and social projects for a certain commission.
Who is suitable for crowdfunding?
Crowdfunding is more profitable for non-commercial projects: publishing a book, issuing a calendar, organizing a concert, shooting a movie, holding a fair, etc. But you can also raise money to start a business: to build a farm, open a children’s club, buy equipment for a pottery workshop. Sponsors willingly support socially oriented projects, monetization of charity, educational and sporting events.
When raising money in this way, be prepared for publicity. You will only raise money to start a small business if many interested parties learn about your idea. Crowdfunding is best chosen by those who already have a certain circle of followers, clients, loyal fans, as well as effective channels of information dissemination. It is also suitable for bloggers, writers, actors, singers.
When you shouldn’t use crowdfunding.
It is not necessary to use crowdfunding before preliminary calculations of profitability (a third of the collected amount will have to be given to the system commissions and taxes), and it will be possible to get the finances only in 1 – 2 months.
Without a promotional campaign plan, you should not start collecting money for business development, as it is important to actively promote the project. Content development, placement of materials, beautiful “packaging” for the idea also requires costs.
Separately, it is necessary to think over the rewards for sponsors who will transfer the money. If the cost of gratitude is high, the economic viability of the campaign will be lost.
