Finding the Capital You Need

If you've always wanted to start a business but have hesitated because you're unsure you have enough money, don't give up. Financial capital can be found to help you start your business. You just need to know where to look.
Financial capital is vital to any business. If you're undercapitalized, you can quickly fail. Often, people starting their own businesses will use their life savings as financial capital. This is a risky move, but it often does allow them to start their new enterprise on solid financial ground. When you supply the funds for your business, it's called own capital.
Financial capital is money. You use this capital to buy things your business needs, such as equipment. Without the necessary funds, you won't be able to buy or lease the equipment and buildings required by your business.
If you don't have your own money to start a business, you can try traditional lenders first. If you qualify, these lenders will supply you with the funds you need to get your business going. In return, you'll pay interest on the money you have borrowed. Not surprisingly, capital that comes from a lender is called borrowed capital.
An option some people and companies explore when looking for funds is venture capital. Investors, looking for ways to make money, will provide capital to a new business in the hope of getting a high rate of return. The way many venture capital agreements work is that the investor provides cash to the company. In return, he receives a certain number of shares of stock in the company.
What's nice about venture capital is it signifies that others believe in the viability of your company. For the lucky or smart venture capitalist, the returns can be high. If the company takes off, he or she can reap a large reward.
But intrinsic in this relationship is the possibility that the new businesses might fail. To minimize the risks, venture capitalists spend a great deal of time investigating potential investments. They want to know as much as they can about the company and the people running it before they hand over their money.
Some people who want to be venture capital investors don't want to go it all alone. In that case, they may join with other people interested in providing venture capital. By grouping their money together, they have more to invest in companies.

As a business owner, you may like the idea of venture capital, but be wary. Venture capitalists often want to be involved in the business. It is, after all, their money at stake. If you don't want this type of interference, then state that up-front. Look for investors who aren't going to want to get involved in the running of the operation.
If having your own business is a dream of yours, then don't let a lack of capital stop you. Research your options, and find the right one for you.
by: Frank Vanderlugt