Basically, the financing of the first own company is an important milestone, but always should be kept in mind that there are various options. Therefore, it makes sense to know all the options too, because a no from your own house bank or a rejection of funding agencies can often even prove to be a plus. At least, such a rejection certainly does not have to be an end to your own business idea. Furthermore, it should be considered whether you really want to work with loans or whether it makes no sense to accept risk sharing by private investors and thereby also benefit from their know-how. It does not always have to be a loan!
From business idea to start-up capital
Nevertheless, the path from the business idea to the initial capital is not so easy, because there are many decisions to make, which then allow the implementation of the business plan or prevent it so that it may even be necessary to modify or completely rewrite it.
It is therefore important to first determine what you want to buy. That means:
- Which real estate
- Which facilities
- Which machines or devices does the company need?
- What should taxes, insurance, salaries and commissions be paid for?
- What own contribution does the management make in the form of work performance and existing know-how?
- What else needs to be funded by internal or external knowledge?
It is also advisable to set the costs rather higher than too low.
The first thoughts
The first thoughts should therefore not only revolve around how to best persuade your own house bank to credit or how to get the most public subsidies, but it is really to look into the distance and on your own vision and to fix this in writing.
After all, you start your own business for your own professional and personal advancement and not for the pleasure of a vegan agency for subsidies and not for the sales of the house bank.
As a rule, it will be the case with planned larger projects that the bank rejects the loan and that funding programs are available but difficult to obtain. So if you really want to start a successful business, it’s best to work with private investors. However, this in turn is not interested in security, but the business idea and the possibility of a venture capital investment.
What considerations should be made?
Therefore, it should not only focus on how the company should look later, but also how to achieve this. That means:
- If you see different ways, you can write them down.
- Anyone who can imagine using different financing methods should also stick to that.
- Anyone who already has secure amounts of monetary or non-monetary nature – be it in the form of own investments, be it in the form of know-how or whatever – should also record this in writing.
It should be considered that even a certain concept or an existing own customer base as well as similar materials can certainly be regarded as a capital base, because they are literally worth the money. This is especially true when working with private investors.
Cooperation with private investors
Much more meaningful, purposeful and efficient is the cooperation with private investors. These potential partners and their networks are easy to research online and are also ideal contacts if the company is planned as a future large company and should have its headquarters or at least part of its business abroad.
In this case, the risk participation is worthwhile, because in this case, the company is not burdened with loans and starts with a very good opening balance. At the same time, further know-how is available in the company.
What does a good financial portfolio look like?
Furthermore, consideration should be given to which investments should be made and when and which reserves might be required. This means that if real estate is to be built or vehicles or machines have to be bought, then the time should be fixed here.
Because at that time the money must be received by the bank or the private investor in the account of the company.
Here, it is still important not only to set up a short-term but also a medium-term and a long-term financial plan.
It can already be seen that you need different sums of different amounts at different times and based on this planning, financing can then be arranged via various loans or risk participations, etc.
Cooperation with banks and savings banks
An option is now the cooperation with banks and savings banks, which solution is not very likely to be successful, especially for start-ups. Most of the time goes by until a decision is made and it is often negative. This does not mean that there are no loans for start-ups, but the banks react very carefully and evaluate. Lack of equity and lack of security and lack of guarantor usually mean that.
The cooperation is a bit more positive if there is already a grant commitment, but this also has too many negative aspects that you should tie your business idea as a start up or just as a small business.