A small business thrives on capital put into it by the founders. As each of them have some amount of remuneration paid to themselves, the business in this mode cannot deal with expansion.
These payroll distributions limit the company to a certain area of inception. It cannot move out of its present location and the founders have to deal with it until there is a considerable growth of the company- big enough to support their salary needs.
What are other modes of investment?
There are other diverse modes of investment for a small business. Let’s take a look at them:
- Friends and family This is the most popular mode of investment by start-ups. There can be considerable amount put forth by well wishers who have a common goal towards the success of the company. Even there is a better aspect in terms of interest paid to these kith and kin. They do not qualify for returning the amount with a specific interest annually. This consensus is not good for the intricacies of the bonhomie shared with them. The spat can turn ugly with them feeling cheated or the relationship can turn sour after not being paid their due for a long time. I know a person who bore the brunt of bitter relationships once his wife behaved rigid with his partner- the partner’s wife usurped the whole company and even runs it still. This is a drawback. But it is advisable to offer some interest to them that is competent in the market, just to keep peace.
- Angel investing This type of investment is quite popular as these investors engage with start-ups. Many people get benefited from these affluent individuals. But these people get a share in your business and the details of the investment should be checked carefully.
Conclusion There are quite a few benefits from various types of funding. But, the bigger picture is being buoyant in the industry with perseverance and dedication. A keen eye and professional guidance is the key to success. PrEver Consulting is doing a lot in these regard to equip start-ups through Helsinki Business Hub and strategies.
PrEver Consulting, along with Helsinki Business Hub and the Finnish Funding Agency for Innovation TEKES invite you to connect with the impressive R&D and product evolution opportunities Finland has to offer with a deep-dive into the Finnish innovation & support ecosystem.
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