Starting a business can be very exciting. A business represents an opportunity for growth and wealth, especially in the U.S. But starting a business can also be very expensive. To make sure your company succeeds, you need to think carefully about how you are going to get the capital required to start your business. Are you going to self-finance or look for investors?
Can Visa Holders Open Business in the U.S.?
There are no visa requirements to register or purchase a business in the U.S. If you are in the U.S. on an H-1B visa, you can open a business.
If you are an H-1B visa holder, there are some guidelines you would have to adhere to if you want to work for the company you start:
- You cannot open a business for the sole purpose of obtaining an H-1B visa.
- You have to employ other people, as well as yourself.
- Your company needs to be able to prove your employer-employee relationship.
- Your company needs to have a separate seat of power. This can be a board of directors or an individual director. The directors need to be able to hire and fire any employee in the business – including you.
- You still need to fulfill the requirements of the H-1B visa. This means you must hold a bachelor’s degree or higher in the required field.
How Much Does it Cost to Start a Business?
Opening a business is often a very expensive process. One of the reasons many small businesses fail is because they simply run out of money. To avoid this pitfall, you must do your research well.
You need to make sure your estimated costs and income are accurate. Your predictions need to match the reality of the situation as closely as possible. This means you need to research the specific costs and income for the business in the area and industry you are going to be operating in. Don’t use generic estimates provided by people who are not in your area or industry.
As a rule of thumb, most microbusinesses cost around $3,000 to start, while most home-based franchises cost $2,000 to $5,000. But don’t take our word for it! Work out what your fixed costs will be per month. To start your business, you should aim to have enough starting capital to cover six months’ worth of fixed costs.
Most of us do not have enough money on hand to cover all of the start-up and running costs associated with opening a new business. Chances are, you are going to have to find other ways to fund your new business.You have two options when choosing to fund. You can either leverage your personal finances or you can seek external investment.
The advantage of financing your business yourself is that you retain full control and ownership of your new business. However, you are also carrying all of the business risks yourself.
External investment means you will need to share ownership or profits with others, or you might need to fulfill certain requirements. But it does mean you can raise a lot of money with less personal risk.
Here are 8 ways to fund your new business:
1. Savings
Using your savings is the easiest way to finance a small business. Savings include money that comes from previous investments, a family inheritance, or other assets. Using your cash demonstrates your commitment to your business to other potential investors and customers.2. Personal Loans
Personal loans are loans from friends or family. You can often get a better interest rate from a friend than from the bank, especially if your credit score is not very good.
To avoid any difficulties, you should treat this in the same way you would treat a bank loan. Make sure the terms of the loan and the repayment agreements are written down and that both parties agree.
Some online and other non-traditional lenders also offer forms of personal loans that can help you start ..
your new business.
3. Credit Cards
Credit cards can provide a quick and easy way to self-finance the start of your business. It is important to remember though that credit cards come with high interest rates for balances that remain unpaid at the end of the month. The interest rates increase even more if you miss a payment.
Taking out a bank loan is another way of self-financing your new business. The bank looks at your credit score and business plan and lends you the money to start your business. Personal bank loans tend to have good interest rates.
Venture capital and angel investment is a way to get other people to help finance your new business. Venture capital tends to be an investment company, while an angel investor tends to be an individual investor.
You will need to have a good business plan and a good sales pitch to attract venture capitalists or angel investors. It is a very exclusive and competitive way to raise money. The most attractive businesses for these types of investors are high-growth companies or companies that are already profitable with good cash flow.
Investors usually fund businesses through:
- Loans – Just like personal or bank loans, you can get external investment in the form of a loan that you have
- to repay with interest. Interest rates tend to be reasonably low.
- Equity – The investor will give you money for your business in exchange for a share of ownership (and control).
- Loan and Equity – This is a combination of the first two options. Sometimes investors will give you the chance to buy back your equity once a growth target has been made.
- An angel investor has some added benefits to a venture capitalist. Typically, an angel investor has been successful in a particular industry and is looking for new opportunities within that same industry. Sometimes an angel investor will leverage their existing contacts and knowledge to help your business succeed.
- 6. Government Programs
There are many different government grants available to help fund your new business. Do your research online and at offices that coach you on making the most of available grants.Keep in mind there are also small business grants available for entrepreneurs facing difficulties, for example, female, minority, or veteran business owners. - 7. Corporate Programs
Some corporations offer programs that support small businesses, including low-interest financing. Some programs give affordable loans to businesses that might not qualify at traditional credit sources.8. Crowdfunding and Crowdlending
Crowdfunding usually involves asking large groups of people for funds. There are many crowdfunding websites dedicated to this purpose.The individual investors usually receive a gift or the product you’re developing in return for their investment. The crowdfunding platform will take a cut of the money raised. Different platforms also have different rules about when funds will be released and what happens if your goal isn’t met.
Crowdlending functions much the same way. Your individual investors don’t get a gift or product but expect you to pay them back.
Conclusion
Although starting a business is expensive, there are many different options for raising money. You can leverage your personal finances by using your savings, or your credit card, or by getting a loan. Or you can get other people to invest in your business by finding a venture capitalist, angel investor, or crowds of investors to get the money you need. (Economic Times)
