Question

how to get funding/do financing for a recreation biz startup (with less than $250k first year expenses)?

Answer 1

Solution

To start a business it is necessary to create a business plan for securing funding from various sources:

1. Self-funding, also known as bootstrapping

One can invest from their own savings or can get your family and friends to contribute. This will be easy to raise due to less compliances, plus less costs of raising.

2. Get a Strategic Partner

Raising funds from family and friends is most viable when they enter into partnership in your business. Or an attractive partnership clauses can be of help to build a team.

3. Crowd Funding

One can take advantage of the resources available online. Crowdfunding websites can be used to raise capital. Here are a few popular choices for startup companies: AngelList, CircleUp, CrowdFunder, Fundable

It also includes asking a loan, pre-order, contribution or investments from more than one person at the same time.

4. Government Schemes

There are different Government schemes to support emerging businesses. One such in india can be accessed through www.startupindia.gov.in
Startups shall avail benefits of these kind of schemes. Govt.(s) around the world even tend to offer lucrative tax benefits schemes in SEZ areas to startups.

5. Angel Investment by Angel Investors  

As the name suggests, Angel investors act as an Angel for any business. Angel investors are individuals with surplus cash and a keen interest to invest in upcoming startups. They intend to take more risks in investment for higher returns.

6. Venture Capital

When the startup reaches a succesful stage that it starts to earn huge revenues, Venture capitalist can show interest. VCs are professionally managed funds who invest in companies that have huge potential. It may be appropriate for small businesses that are beyond the startup phase and already generating revenues. They usually invest in a business against equity and exit when there is an IPO or an acquisition.

7. Business Incubators & Accelerators

Early stage businesses can consider Incubator and Accelerator programs as a funding option. They are generally found in almost every major city. Incubators are like a parent to to a child, who nurture the business.These programs normally run for few months. One will also be able to make good connections with mentors, investors and other fellow startups using this platform.

8. Bank Loans

Normally, banks is the first place that entrepreneurs go.The bank provides two kinds of financing for businesses. One is working capital loan, and other is funding. Almost every bank in India offers SME finance through various programs. Bank loans requires collateral assets to secure the loans and process to get a bank loan can be tiresome sometimes.

9. Microfinancing or Loans from NBFCs

when one can’t qualify for a bank loan, there is still an option i.e Microfinance is basically access of financial services to those who would not have access to conventional banking services. Similarly, Non Banking Financial Corporations are corporations that provide Banking services without meeting definition of a bank. NBFCs are businesses engaged in the business of financing in lieu of interest in an organised manner with a Non Banking license from Apex Bank of the Country (RBI in india)

10. Try to minimize First Year business Expenses

You may not need funding if you keep initial business cost low. It is wise to reevaluate the startup cost.