Some of the biggest names in the industry today like Apple, and Hershey’s began their journey as home based businesses before going on to become well-known corporations. This fact alone gives you an idea of the tremendous potential of home based businesses.
One of the biggest benefits of starting a home based business is that you are the master of your own time, working from the comforts of your home. You can work longer hours or shorter hours; you can work alone or hire a few people to work for you; the point is, you can scale up or scale down quickly. Another important benefit of operating a home based business is that you can qualify for various tax benefits. You can qualify for a rebate on your home’s mortgage interest, maintenance and repairs, property taxes etc.
It’s these and many other benefits that make starting a home based business such a good idea. But, to breathe life into any business idea, you need access to finance. You will need to invest a certain amount of money to kick start your business activities; the amount of investment required is dependent on the scope and scale of your business.
When it comes to getting funding for a business that you want to operate from your home, you can explore diverse avenues. Before you zero in on a funding resource, it’s important that you know what you are getting into and the pros and cons of your decision. Let’s take a look at five resources that you can tap into for your home based business funding needs:
# 1. Friends and family
A number of home based business owners get funding from friends and family members. That’s the most convenient resource you can tap into. If you are embarrassed about taking help from your family, think of it as a loan that you are taking. Also make sure that you can pay them back on time. You can include an acceptable interest rate too, which will make things as professional as possible.
If you are thinking of borrowing money from your near and dear ones, makes sure that your borrowed amount is at the lower end of the scale. After all, you are running a business, and there is as much a chance of things heading north as their heading south. If you keep your borrowing amount to the minimum, there won’t be any hard feelings if you aren’t able to pay it back on time.
What you could also do is borrow small amounts from different people. Also make sure that the deadline for paying back the borrowed amount is not the same. This will take some pressure off you.
# 2. Low interest loan programs and grants
If you really want to go the professional funding route, there is no beating a low interest loan for your business. Make no mistake, if you want to get these loans for start-up financing you need to first get hold of a profitable business idea, provide sufficient documentary evidence that it is a profitable idea and then go about finding a loan or grant that covers your business activities. Check SBA.Gov Loans and Grants Search Tool to search for loans or grants that apply to your business. This tool will give you information about all the grants, loans and venture capital programs for which your home based business will qualify.
# 3. Dipping into your own savings
Everybody will tell you that dipping into your own savings to finance your business idea is not just a risky but a stupid idea. The question is why is it such a stupid idea? If you believe in your business idea and its potential to generate revenue, why shy away from putting money where your mouth is. It’s your idea, it’s your savingsmoney and it will be you home based business. If you trust your business idea enough, what’s the harm in using your savings to kick start your business? Of course, all these aspects only come into play if you have some savings lying around in your bank, and you are thinking of using them for your business.
# 4. Crowd funding
This is the new age way to fund your business. It involves raising money for a business project through a large number of people, typically through the internet. To pull off crowd funding, you need a good idea and convey the profitability of this idea to would-be investors. You need to be able to talk to them passionately about your project and why it merits their support. The great part about this funding is you could attract people by way of various perks in exchange for various amounts of funding. For e.g. if your business idea centers on making and delivering pizzas, you could name a pizza after the name of the highest contributor to your funding.
# 5. Adopt the bootstrap approach
If want to minimize borrowing, use bootstrapping to fund your business. This means you fund your business with its profits as you go along. It’s for people who have just about enough money to start their business and want to depend on their revenue generation and profits to grow their business or enhance its products and services. One of the benefits of this approach is that it keeps debts to a minimum and reduces financial risks. It helps you focus on getting customers and pleasing them, rather than thinking about making the debt payment that is looming on the horizon.
But there is a flipside to bootstrapping as well. The fact that you want to take on no external debt means the growth will be in step with business profits. This might slow the growth down, if your business doesn’t become profitable quickly.
The success or failure of your home based business is determined by its concept and how well you are able to bring this concept to life. If you think you have a great idea, don’t be scared to tap into some innovative funding sources. Back your idea to the hilt, and make no compromises on its funding. I am sure one of the funding avenues mentioned in this article will be a right fit for your business’s needs and requirements.
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