Steps to start business and arrange fund
It is very good that you are thinking before starting any business it shows that you are willing to take a well-thought decision.
Before starting any business I suggest going for
- Your skill analysis
- Your interest analysis
- Your financial analysis
Based on the above analysis identify three to four businesses with priority. Now start your market analysis from priority to last priority and rate every business on 5 point rating scale. High market demand 5 points, lowest market demand 1 point
Similarly rate your options on risk, investment, and overall business.
Now select the best score business and prepare the business plan and start executing that business plan.
In the present scenario, the best businesses are 1. Online food delivery 2. Online grocery 3. Laundry 4. Online education 5. Health services 6. Hospitality 7. Car rental service 8. Financial consultancy 9.Digital marketing 10. Web designing 11. Online gaming
To get finance for business –
Business needs investment and many time people face problem to decide whether to go for business loan or not. I have seen many businesses suffers huge losses due to wrong timings of taking bank loan.
There can be three types of situation for any entrepreneur
- 1.To go for business loan
- 2.Not to go for business loan
- 3.Delay the business loan
All of us know that business loan comes with commitment to pay the business loan with interest. There are many sources available for business loan like banks, NBFCs, micro finance money lenders, friends and relatives, customers etc. I prefer to go for banks for business loan due to their well regulated mechanism.
Best time to take business loan is in any situation is
- 1. When your business is on growing stage
- 2.Returns are sufficient to repay loan + Interest
- 3.Businesses needed investment
Before taking any business loan consider your Debt service coverage ratio (DSCR)
DSCR = Earnings Before Interest, Tax, Depreciation, and Amortization(EBITDA)/ (interest +Principal)
Above conditions vary from business to business
There are many options to get finance for a running business. For new business arranging fund is difficult so I suggest you first start your business and build some credit as a business owner then approach the financier.
Very common finance options are 1. Banks 2. NBFC 3.Microfinance 4. Partnerships 5. Venture capital 6. Seed capital 7. Friends and relatives
Prepare a business plan covering investment plan which covers the a. how much money needed 2. How you arrange the money 3. How you return the money 4. What security you are going to offer 5. Your credentials
Approach to financial institutions with your business plan. Financial institutions continuously look for good clients, if they find goodness as er their criteria, they will give you the loan/investment. Normally financial institutions look for a. Good business b.profitability c. Promoters credibility d. the future orientation of business e. safety of their investment
Before opting for loan look for
- Rate of interest prefer lowest interest rate
- Processing fee or hidden charges
- Loan closure terms and conditions
It is advisable to consult with your legal advisor before making any loan agreement.For small business loan moratorium is also a good option at least for first six months. A moratorium is a delay or suspension of obligations like interest,principle or taxes.
You can write to me for more details at email@example.com