Are you an entrepreneur looking to get finance to fund your creative business idea? You might have considered many possibilities, but one such financial possibility is the idea of personal financing. Personal _finance has been around for several years, wherein people resort to savings and other methods of collecting money for their startups.
However, it is always better to diversify your financial sources for the business. Putting all eggs in a bank’s basket may be risky as you never know what emergency will arise. Hence, looking for the best personal finance resources and selecting the ones that suit you the best to support you with all commercial and financial needs is a wise decision.
What Is Personal Finance?
It is often honestly said that whenever you think of starting a business, the first person you should go to for investment is yourself. If you believe in your creative idea, your sources of finance should initially include your savings, your family savings and your assets and properties.
Personal finance is raising funds from within an intimate circle to invest in a startup business. This usually comes before the idea of approaching a bank for credit.
Sources Of Personal Finance
When you start to look up, you may find many ideas about personal financing, but to chart out your plan carefully, you need to understand the best personal finance resources and how they help you. You can go to a bank for credit, or you may have an angel investor, but every source has many limitations that personal finance may make up for.
Personal Savings
This is an essential criterion for financing the business using personal resources. Personal investment refers to the idea of using cash or collateral assets. You might have some money saved in your bank account, or you may have some collateral assets that you can encash. Everything adds up as savings.
Using personal savings at the initial stage is always a good idea as it ensures you of your dedication towards your concept. Personal savings are often repaid at the later stages of a business, where you start to earn considerable profits.
Love Money
Primarily called love money, it is the money loaned by people who are close to you or have any blood relation with you. You may consider an example wherein your spouse or their parents lend you some money for your business. In more complex terms, it is known as patient capital, as you can wait till a later stage of your business’ success to pay them off.
People described as participants of love money are close family, friends, spouses, cousins, etc.
Angel Investor
An angel investor is a retired business person who directly invests in other small businesses at early stages to support them through. They are experts in their field but do not participate in decision-making. They never share their network of contacts but do supervise the company’s management policy as a return for their investment. You can find an angel investor within your close contacts if you search thoroughly.
Assets And Investments
You might own tangible and intangible assets like gold coins, cryptocurrency, mutual funds, real estate, etc. Acquisitions and investments can be of great value in personal finance. They act as a source of saving you from impending doom due to a lack of enough business funds. You can encash your assets as and when necessary for an initial investment into your startup.
Bottomline
It is essential to understand that personal finance plays a significant role in your business. It sets a foundational stone for other institutions to trust you with your risk-taking abilities when lending money. Remaining flexible with ideas and opportunities can help you gather more funding. As a wise business decision, private sources of finance should be your initial plan.
