When you start a small business in Hong Kong, you will need funds. Businesses without the capital will struggle within the first six months. There are a number of options available for those in need for businesses. It is important to look into each of the options and determine the best one for your needs.

A Business Loan

A business loan is often one of the first thought of options when looking into funding but they are not necessarily the best. Loans can offer a quick way to gain the money that you need and then pay it back over a period of time. It also gives your business the chance to build up a credit history for later needs. There is interest paid on the loan and it works similarly to personal loans and mortgages.

You will need to have a business account, in the name of your business, and a strong business plan. This plan will need to show how you believe you will build the equity over the years, the type of profit you expect and how you will spend the money. It is important to spend the time building up the business plan – this will also help know the direction that you want to take your business in the future.

You Own Savings

Many people consider using their own savings for their business as a form of investment. Investing in your business should offer you a retirement fund but, like all other investments, there are risks to it. It does not guarantee that others will invest into your business but can lower the risk of having to default on a loan if the profits are not as expected.

Always make sure you have a business account. Using your own personal account for your business will mean that you are financially linked to your company. This could mean that investors and other businesses will go to you personally to recoup the money should your business fail.

Looking for Investors

Investors are a great way to help fund your business. This is seen on the stock market on a daily basis. Hong Kong businesses offer shares in the business for a set amount of money and the investors gain a share of the profits on a monthly and yearly basis. Many businesses opt for this option but you will need to make sure you keep the main share to make the main decisions – losing more than half of the business means that you will struggle to make decisions for your company.

You are not guaranteed investors into your company. They will want to see the profits you are making, the business plan and want to input ideas into how the business is conducted. You will need to determine the amount of shares you are willing to offer and the amount that you want for those shares, which can take time and effort. There are also different types of investments to consider, including private equity funds and stocks.

Take your time to determine the best form of funding for your business. There are government grants available, which may be worth looking into. These grants are not repayable and will help to get your business started. Having forms of funding will help you grow and succeed. You can opt for different methods at different points if you decide that you need more funding and you have become successful enough to look into investment and loans.

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