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Choosing the Right Financing Model for Launching a Startup

Let us take a look then at some of the most popular financing models so you can choose the approach that works best for your future company. Choosing the Right Financing Model for Launching a Startup.

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Choosing the Right Financing Model for Launching a Startup

People like to say that we are living in a golden age of startups and they are not too far off the mark. Networking has never been easier, online resources have made marketing affordable and niche markets are finally getting a necessary voice.

Still, in spite of all these favorable circumstances, one problem persists – founding business requires money, and finding money is just as hard as ever.

Let us take a look then at some of the most popular financing models so you can choose the approach that works best for your future company.

1. Personal loans

This method can be best described as borrowing money from friends and family. The reason why this method is so popular amongst inexperienced entrepreneurs is the loose terms of the agreement.

You don’t need to do credit checks and you don’t need to repay crippling interest rates. However, there are some drawbacks. First, this model is also horribly ill-fitted for large-scale projects.

And then, there is the fact that not all social circles are able to produce necessary startup capital.

2. Crowdfunding campaigns

The rise of kickstarter platforms in the early 2010s definitely changed the way how we look at financing. Today, you are able to bypass all the traditional institutions and parties and work directly with your future users on bringing projects to life.

The risk is very low and the community makes it all the more interesting. On the other hand, the success of crowdfunding campaigns is far from guaranteed, they work only for certain types of projects, and, due to their crowd-driven nature, they lack flexibility.

3. Traditional business loans

Traditional business loans usually imply borrowing money from a financial institution like banks and government funds. Since all these organizations are well-established and you are making an agreement under very precise terms, this financing model is regarded as very safe and transparent.

The main problem you will face is the fact that banks tend to be very picky regarding the parties they choose to work with and the interest rates become far less favorable once higher risk is involved.

Right Financing Model for Launching a Startup

4. Alternative business loans

Alternative business loans are designed to answer very specific needs. For instance, if you are experiencing cash-flow problems, you can resort to some easy business finance service that will give you cash advancement on your outstanding invoices so you don’t need to wait to receive the money from your client.

The main problem with these microloans is that, although it is great for putting out smaller fires, you are rarely allowed to raise enough money to sort through more serious issues.

5. Venture capitalists

Venture capitalist is a term for a person or an organization that will provide you with the necessary capital in exchange for a proportionate part of ownership over the startup.

Although it sounds very limiting, this financing model actually makes an excellent choice for companies that don’t own physical collaterals that can serve as a lien to loan.

Also, the involvement of another party takes some pressure off the owner’s shoulder. The price you pay for this relief is a noticeable loss of independence.

6. Angel investors

On paper, angel investors are very similar to venture capitalists. However, unlike VCs that take very calculated risks, angel investors are much more flexible, open to risks, take involvement in the startup development in its earlier stages, and largely operate on the basis of personal preference.

Since they are so personally involved, they often play the role of a mentor and provide entrepreneurs with coaching. Unfortunately, angel investors are as hard to find as you can imagine.

We hope this article will give you some general idea of the strengths and weaknesses of the most prevalent financing methods your business will most likely use to secure startup capital.

See which one of them works for your particular company and if there is any way to combine several approaches to increase the chance of success.

The time for starting a company has never been better. Don’t miss these favorable circumstances because you are unable to raise enough money.

Tracey Clayton is a working mom of three girls. She's passionate about marketing and everything tech related. Her motto is: "Live the life you love, love the life you live."

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Business

How To Maximize Cloud Computing For Your Business

If you’re a business owner and have been using cloud computing, this article will discuss several methods that will help you maximize cloud computing for your business:

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How To Maximize Cloud Computing For Your Business

As time passes by, technology advances to advance. With everything going digital now, the traditional use of portable hard drives is slowly disappearing. The best example is how businesses continue to take advantage of cloud-based services for convenience and mainly to increase their productivity. If you’re not familiar with cloud computing, it pertains to the delivery of services that stores and access data via the internet. It commonly includes servers, cloud storage services, online databases, and many others.

Most companies turn to cloud computing for security, data synchronization, and convenience. Flexibility and collaboration are also common factors. One advantage of using cloud computing services is that it reduces operating costs. Though it’s not often mentioned, sustainability is another reason why companies switch to cloud computing. Moving to the cloud lessens the usage of physical data centers, thus saving energy and reducing the impact on the environment.

There are many ways of improving your business with cloud computing. However, there are still companies that are yet to discover the full capabilities of cloud computing. If you’re a business owner and have been using cloud computing, this article will discuss several methods that will help you maximize cloud computing for your business:

1. Improve Security

Your chosen cloud provider comes with a security system. Because of this, your files are most likely safer in the cloud. However, essential cloud services only offer basic security, so you still have to be careful. Security breaches can badly affect your business. Hackers make these attacks, but sometimes they could also be caused by an employee.

How To Maximize Cloud Computing For Your Business

One way of improving cloud security is to employ features that help monitor end-user activities. By spotting suspicious usage patterns and activities, you could prevent a security breach. Training your employees and equipping them with security tools is the best way to prevent such attacks. This could be further enhanced by setting up additional security protocols and educating them on cybersecurity. Another way is to restrict access to important files. You can do this by setting passwords on such files.

2. Utilize File Syncing and Organization

The right cloud infrastructure solution for your business will provide your team access to the newest files anywhere. Instant file synchronization is another benefit of using the cloud. The cloud is a virtual location where you and your team can conveniently share files. This is very useful for businesses that allow employees to work remotely. With a stable internet connection, your staff can work from anywhere in the world and access files on any device, allowing flexibility.

Also, cloud data storage has a similar structure to a filing cabinet, where files are stored in folders within the storage (filing cabinet). It’s essential to construct a storage layout and establish a standard labeling system if you’re sharing access with your team. Organize your files from the beginning and as you go. This will make it easy to find and identify files whenever they’re needed.

3. Back-Up Data

Backing up data is another crucial security consideration in businesses. Similar to file syncing, you can update your backup data as you work with the cloud. The cloud can duplicate the data you input into another site (off-site) where they’re secure from threats. This will also enable you to access the backup data when an error occurs conveniently. More importantly, it guarantees business continuity and reliable data recovery.

4. Optimize Communication

Use cloud computing services that offer more features that optimize communication, like calendars and emails. This will help you arrange meetings more efficiently. You can even facilitate more extensive collaborations and set synchronized deadlines for projects.

Cloud computing data center. Storage cloud on computer data center background. 3d illustration

5. Monitor Data Analytics

Look for cloud providers that offer big data analytics. This will enable your cloud service to collect data about your business’ buyers, trends, performance, etc. Then, these data can be calculated to identify growth opportunities. Other data analytic services collect information that may help create solutions to your business’s workflow problems.

6. Stay Up-To-Date

System updates are a must in cloud services to patch up bugs, address technical issues, and adapt to the changing consumer needs. So, when there are system updates, make sure to implement them once you’ve verified compatibility where applicable.

7. Use Social Media

Social media is possibly the most successful platform in digital marketing. However, it is often overlooked as an application of cloud computing. Social networking sites will help you find your customers and easily share data with them through page posts.

Final Thoughts

Although there are numerous ways to maximize cloud computing for businesses, these are the most helpful. With the increased use of cloud computing, companies can quickly improve and boost their productivity and efficiency when these services are maximized to their full potential.

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