Question

How will you finance your business? Be specific about where you’ll get the money and how likely it is to happen.

( online shoes business)

Answer 1

Savings- The easiest way to finance a company is maybe by using your own money. You should save money for a period of time in an ideal world, and use this money to finance your business. This is probably the wisest, most conservative and most secure way to start a company. An obvious problem with this kind of funding, though, is that you're constrained by how much money you can raise.

Credit cards- Credit cards can provide an effective means of financing a business and extending its cash flow. They can be used to pay suppliers and often earn discounts, some protections or other rewards. The downside to credit cards is their being directly connected to the credit score. A further source of funds are cash advances. Most credit card companies are putting caps on their cash advances and charging them high rates. As such, it can be costly to use cash advances but it can also be useful as a last resort.

Friends and family- Many businessmen support their small businesses by making friends and family invest in them. You can ask your friends and family to make an investment in equity, in turn selling them to a part of your company, or you can ask them for a loan. There are two concerns about the use of friends and family as a source of business funding. The first is that if the company fails you risk having an effect on the relationship. Understandably, when it comes to the risk of losing money people are still very touchy. If you are willing to sacrifice your relationship for the sake of your company, you must ask yourself.

Angel investors- Angel investors are private individuals or small groups of executives who invest in businesses, usually by making a purchase of equity. They can provide money, expertise and guidance to help start a business and grow it. It can be very difficult to get an angel investment, because the investor needs to see growth potential and a viable business plan with a reasonable exit strategy. An exit strategy is an event of liquidity that enables the investor to recover their investment and to take their profits. Most angel investments have a time horizon of three to five years.