If you want to look for a start-up funding to fulfill your dreams of becoming an entrepreneur, you are in the right place. Hong Kong is the second in the world when it comes to female entrepreneurship.  Even though there are only 10% female directors in Hong Kong, 45% of entrepreneurs are women. So, if you’ve had doubts about your ability to become a business owner, you have nothing to fear. This is the perfect place for you to build your business.

 

Small and Medium Enterprises (SMEs) made up 98% of the business units in Hong Kong as of March 2016. Approximately 320,000 SMEs provide jobs for 1.3 million people. This is 46% of the overall employment in the region. These data tell you two things. First, SMEs are encouraged by the government. Second, there is a huge opportunity for budding entrepreneurs.

 

Of course, that is only possible after you secure your funding in Hong Kong. To help you get started, let’s discuss the four sources of start-up funding that you can find.

4 Ways To Get A Start-Up Funding In Hong Kong

 

4 sources of start-up funding for your business

 

From the government

Since SMEs make up such a huge portion of the business units in Hong Kong, it is only natural that the government gives aspiring entrepreneurs its full support. In fact, the government offers several funding schemes that you can choose from. The most common is the Microfinance Scheme. It was launched by the Hong Kong Mortgage Corporation Limited (HKMC) and provides three loan types for your start-up: Micro Business Start-up Loans, Self-Enhancement Loans, and Self-Employment Loans. It also provides mentorship programmes and various training for potential business owners. If you think that this is not something that fits your funding needs, there are other options – several in fact. You can visit Gov.hk for more information.

 

From investors

The next option to get funding in Hong Kong is to look for investors. There are people who have the finances and the wisdom to run a business, but do not like doing the “dirty work” of managing a company. This is why they opt to invest in start-up companies instead. You can find these investors and pitch your business plans to them. You will need to sell the idea that your business has the potential to become very profitable. It is advised that you start looking for investors in your family or circle of friends. They are the people that you know and trust. They also know your capabilities, so selling the idea to them might not be too difficult. If there is no one in your inner circle, then you should turn to “angel investors.” In Hong Kong, there are two types of angel investors. The first are those who are willing to invest up to HK$1 million depending on the potential of your business. The second group can invest up to HK$5 million. Of course, there is a catch to this. Nobody gives away money. These investors will be interested in being a shareholder. Some of them may even want to take part in the business decisions. It is up to you how much influence you want these investors to have in your business.

 

From lenders

The third option for your start-up funding is lenders. This is the riskiest among the four options because you have to put yourself in debt. But if your business works and you end up getting a sizeable profit, you can use it to finance your new business. There are various options for you. A personal loan is the quickest and best way to get your start-up capital. You can forget about business loans for now. Banks usually entertain business loans only from established companies. If you are just starting, you might not get a business loan. Of course, you can ask family and friends to lend you money – and pay them back with interest. Just make sure you get everything in writing.

 

From your savings

The final option is to use your savings. The truth is, this is the best way for you to fund your new business. If you use your own money, you do not have to answer to anyone. You also don’t need to pay anything back in interest. So, if you can wait for a couple of years, just save up for your business capital. Don’t turn anywhere else for funding. Stay in your day job for now and religiously save for your future entrepreneurial dreams.

 

Tips to prepare yourself for entrepreneurship

Although saving for a business is easier said than done, the rewards will be great if you finance your start-up with your own savings. It is a great feeling to start your business without any debt. Anything that comes in will be profit and will not be used to repay anyone.

 

Here are a couple of tips to help you be financially prepared when you start your business.

 

  • Start by knowing your initial expenses. If you know your target, it is easy to divide your saving goals so you can start your business as soon as possible. Check how much you need to process the business permits and licence that will allow you to operate legally. You should also calculate the cost to buy the equipment and supplies that you will need. It is okay to bloat the figure so you have a buffer, in case something goes wrong.
  • Forecast your monthly costs. After the initial purchases, you need to budget for at least six months’ worth of overhead expenses. This may be tough to determine and some thorough research will be required. If you decide to borrow money, make sure you incorporate the payments into your monthly budget. The wages of employees and the inventory of supplies should also be considered.
  • Build your emergency fund. This is the money that you will use to pay for your personal expenses. Usually, there will be no profit for the first few months of your company. This is okay. However, you need to plan for your own living expenses. Six months’ worth should be enough – but if you can increase that, it would serve you well in the future.

 

Make sure that your start-up funding target includes these three things – otherwise, you might end up falling short of finances. Many new companies close down because their finances failed to sustain the first few months. You do not want to risk declaring bankruptcy so early in your stint as an entrepreneur.

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Abigail Wong is the Writer of The New Savvy.

She is a Singapore Management University 2nd year undergraduate specialising in Strategic Management. From Tampa, Florida, she possesses an International Baccalaureate diploma from C. Leon King High School, and previously held the position of Treasurer of the King High School Division of the French National Honour Society and the Science National Honour Society. Abigail is currently acting as President of the French Cultural Club for SMU International Connections, and as a Resident Advisor and Fire Warden for the SMU Residences at Prinsep.

Abigail is a Former Florida Science Olympiad Champion in chemical forensics and protein modelling, and former Health Occupation Student’s Association District Champion in clinical nursing.

In her free time, Abigail enjoys interacting and caring for animals. She has previously volunteered for the Humane Society of Tampa Bay as an Adoption Assistant.

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