Coming up with an ingenious idea for a business is relatively easy; it’s the implementation and taking action that is difficult. Fortunately, you won’t always have to start from scratch. Since plenty of entrepreneurs have come before you, it would be wiser to borrow from their experiences and learn from their mistakes.
Of course, you’ll have to find your way through the industry you want to grow in, but it makes much more sense to utilize your resources. This way, you’re not diving off the deep end without so much as an oxygen tank on your back. Keep in mind that you can take risks and prepare for what can happen if things don’t go according to plan.
But before you worry about taking risks and implementing your plans, you’ll need to get over the biggest obstacle of them all when it comes to establishing a business: securing your funding. Getting a business to take off the ground will be next to impossible if you don’t have the money to invest in the equipment or manpower needed to carry out your plans.
Therefore, work on getting your capital first. Of course, you’re going to need a solid business plan if you’re planning to approach potential investors or apply for a loan because this will show your determination regarding your business. Here are three options you can consider when looking for where to get your seed money:
Small Business Loans
Small and medium-sized enterprises (SMEs) are the backbones of the economy. They provide thousands of jobs and opportunities to people across the country, making them essential to society. That’s why initiatives such as Enterprise Singapore’s Enterprise Financing Scheme (EFS) can help SMEs secure their funding.
Although the EFS initiative won’t provide the loans themselves, they’ll share the risk with the borrower as a guarantee to the lender. Most of the time, the risk share is static at 50%, but sometimes, it can increase to as high as 70% for young enterprises that have yet to exceed the five-year mark.
But even if you don’t look to traditional lending institutions for your funding, you can always apply for a small business loan from accredited lenders. You just have to make sure that you have a stellar credit score and history to increase your chances of getting approved for the loan without much trouble.
If you’re not particularly fond of the idea of borrowing in lump-sum for your business capital, you can always consider approaching venture capitalists. These are investors who are constantly on the lookout for promising endeavors that have the potential to succeed in the rapidly changing business landscape.
However, you must understand that you can’t approach a venture capitalist with a half-baked idea. Since you’ll be pitching your automotive business idea to potential investors, you’ll need to be able to back up your claims with solid arguments and data. This way, they’ll be more than willing to consider revenue-based financing in your business moving forward.
This could also be an excellent opportunity to approach venture capitalists who you believe can share your values and worldviews when it comes to what you’re passionate about. For instance, if you’re determined to create the newest sustainable car as an eco-friendly alternative to traditional vehicles, then you should find someone who believes in that reality as well.
Family and Friends
The last funding option you can consider is borrowing from your friends and family. Most people are divided when it comes to this option because half are uncomfortable with the mere idea of borrowing money from people they’re related to, while the other half considers them as their first option.
Thus, no matter what you decide, you should know that borrowing money from your friends and family is always an option. If you were to go down this road, you wouldn’t have to worry about the stringent borrowing terms or application requirements in traditional lending institutions, and your credit score will be irrelevant.
You also won’t have to provide collateral, especially because you might not have any to put down as one. But this is not to say that it would be easy. After all, this is still money you’re talking about, and a substantial amount at that. Hence, if you’re comfortable with the idea of borrowing money from your friends or family, then you should consider this as your last resort.
Once you’ve decided how to secure your funding, the next step would be to undergo the process and get a hold of your money. Then, you can start implementing your plans to get your business off the ground because after you set everything into motion, it will be much easier to navigate your way through the industry.