Capital play a role of backbone for any business. Without capital it’s cumbersome task to start any venture. While it’s quite impossible in case of merchandise which is kind of business.

I’ve experienced of service business so i decided to share my opinion regarding the importance of finance in any start-up.

No doubt, unique idea put significant impact on new venture but passage of time you required capital to advance your business activities which can only be possible through sufficient funds. Because you need to develop market position and brand image which assist you to promote business.

There are many ways to generate funds for start-ups. As venture capitalist is the most prominent source of fund rising for start-ups while we mostly missed other better way to get funds for new ventures.

First try to raise funds through your surrounding. It mean to say that you shared your ideas with your family members who are already doing business or have some investment but don’t have time to manage any kind of business activity. As everyone know that investing in any unique business is the best deal of investment. It’s bitter truth, a person always trust more on those to whom they have blood relationship. Secondly to whom they spend more time. So Family & Friends should be your first priority to get funds. But there is one very big disadvantage for raising funds from your nearest one because if you failed to get success in your venture or may face loss in all this activity. There is might be chance that you suffered a lot in your family or in friends circle.

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OK, If you don’t like the first idea for financing your business. Don’t loose hope, still there are many possibilities you own. Because there is nothing impossible. As words itself spoke that I m Possible. No and never give up should be your policy.

Second try to fund raising for your new venture should be to meet up with big business man. Those who are searching ideas to invest. They really appreciate your brainstorming. How you find these people, it’s considerable question. There are many ways to become a social person. You may join some social clubs like Rotary Club(Most of the members are business man), Lion Club (Most of the members are bureaucrats) etc. It give you chance to meet up with reputable people in your surrounding. Mostly among them are well educated, sophisticated and experienced people. So, after first two or three meetings you may share your new venture ideas with them and try to convince them to invest in this lucrative opportunity. If they agreed, you may proceed further by signing up the contract of partnership(Mudarabah).

There is a might be a chance that you may not get success by originating the funds from above sources. Still there are others ways to lift up the funds. One of them is to borrow funds from any financial Institution. For this purpose you have to show some collateral to get the loan. And you can start up your new business from this way. It’s called Debt financing. After that, you have to pay fixed interest plus slightly amount of principal repayment every month. It depends on the contract with bank.

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Another way of financing via venture capitalist. Who are venture capitalist? Those who invest in new ideas. Why they invest in  your ideas? Because they feel that it can generate profit many times as the amount invested in it. But there is one major disadvantage of this source of funding. They always put more share as compare to you because after sometime when business starts flourishing they acquired the whole business.

All above are the ways to get funds for you new venture. Unfortunately, I totally slipped my mind and wrote the ways to generate funds for any new starts up.Let’s go back to main topic of discussion, that’s the significance of capital in any start up.

Some people believed that for startup, finance doesn’t play paramount role. Whilst uniqueness emphasis more on forecasting the success of any start up. I quite disagree with this school of thought except in case of Information Technology which emerged widely in Twenty first century. Financing is backbone for any venture. Without capital your startup is just remained a theoretical idea. Perhaps, you get success in new venture but it would be like a speed of snail. For fast and consistent growth Money play vital role. So before starting any venture you should first forecast your financial requirements.

Prior arrangement of financing would enable you to do better business otherwise when your startup needs your full attention you start emphasis on raising funds to continue your day-to-day operations. So it would be much better to fix this problem before emerged.

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Power of money and role of Finance

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