Often business owners feels the need of raising capital from outside which is required for carrying out the operations of a business and to make it an attractive option in the eyes of investors and customers. While company is in the process of raising equity, they can follow the steps mentioned below for raising funds.
Consult a lawyer
Before raising funds, make sure that you clear out the facts with your lawyer about how equity can be raised from public and if laws have been changed for raising the funds. It is important to have someone who understands the laws and its implications. They make sure that the contracts are framed in favor of the business companies and to protect them in case of any issue. Once individuals have inquired into the rules, the next step comes in of looking for options for funding.
Ask for money from relatives
It may seem a bit awkward to ask money from relatives, but one would be surprised to know that over 30% companies raise the capital from family members. If the owner is ok with this option, then the lawyer should make sure to frame a business contact with the help of which money can be raised legally and by abiding to the clauses. The relatives should be informed about your requirement and also the time in which you would repay the capital so raised.
Use your savings
This is another way of raising funds for business. However before picking up savings for your business, it is better to consult your financial advisor to calculate the risks if any which may come up to an individual and if it will affect his personal life.
Some individuals prefer using credit card instead of using their savings or asking for money from relatives. However before this option is availed one should check on interest rate charge by credit cards and to be sure that you have opted for the card with lowest rate of interest.
Before accessing for a venture capital, conduct a study about your organization and what image does it has in the outside world. If the status of the company is sound then the next step is to look for options from where venture capital can be raised.
Another way of raising capital is from employees, whosoever is interested to be an investor in the company. With this, organization is able to get a good and motivated force of employees who are ready to work for the organization selflessly. However this also puts the management control in risk, hence it is again advisable that lawyers should be consulted before taking such a step and agreement should be made for raising such equity.
Raising funds have been made a lot simple for companies these days; however, business houses have to make sure that they follow all the rules and regulations as have been set by the regulating authorities. With a public issue company can raise huge amount of funding however this method is not suitable for the newly formed or small companies.