Fund Your Small Business
Ask any entrepreneur about starting up a business, and they’ll rattle off an exhaustive list of challenges they had to face. One of the most potentially difficult things you’ll have to do is acquire funding for your startup. Investors and lenders can be brutal; they want to know their money is well-spent, and if you can’t prove that, you’ll be out on your ear. If you want to get funding for your business, you’ll have to bring your A-game to the application process. Here are some of the ways you can accrue funding for your killer business idea.
Use personal finance
If you have enough money stored away and you know you believe in your business idea, then using personal finance is definitely an option. While it shouldn’t necessarily be your first port of call, you can bypass a lot of difficulties if you use personal finance; you won’t need to apply to lenders or investors and provide proof that your business plan is solid, for example. It’s also possible to use personal finance to make up the last of what you need after a large investment; you could look to payday loans or other short-term loan options to give you that much-needed boost.
Apply for a business loan
Business loans are probably the most popular way for businesses to acquire funding. The process is simple: you apply to a lender to give you the cash to start your business up, with the promise that you’ll pay it back over a period of time. However, in practice, things are rarely this easy. Lenders will want to see a detailed business plan so you can demonstrate your methods for making a profit. Nobody wants to invest in a business that’s guaranteed to fail, so it’s a good idea to engage with business consultants to ensure your methods are sound.
Ask family and friends for help
Another popular way to secure business funding is to appeal to friends and family. You may have some particularly wealthy acquaintances close at hand who would be willing to give you the capital. Of course, they may wish to be a partner in your endeavour, or they may have even more exacting criteria than a professional lender would. That’s up to you and them to negotiate, but it’s always worth asking, because friends and family can be much more amenable than companies. Ask around and see if anybody would be willing to help you out.
Crowdfunding is a slightly unconventional method for funding your business, but it can be appropriate depending on your circumstances. You should look into crowdfunding if your business provides a tangible benefit to people; it’s even better if there’s an ethical slant to what you do. However, you’ll be held accountable in an extreme sense if you use crowdfunding; the public are just as difficult to please as others would be investment-wise, and they won’t be happy if you don’t show your plans for investment return. You’ll need to keep your campaign regularly updated if you want to use this method.
Look into angel investment
Angel investors are a good option if your business looks like it might have enormous growth potential. Many major tech companies, including Yahoo and Google, were originally funded at least in part by angel investment, so if you think you’ve got a foolproof plan for the next big thing, you could look into this funding method. However, it’s worth remembering that angel investors will almost always want some kind of equity in your business. They won’t be happy with just providing the funding and letting you get on with it, so only use this method if you’re happy with that.
Unlike angel investors, venture capitalists will often actually want to actively participate in the day-to-day operation of your business, so this is only an option for you if you don’t mind ceding a degree of control to them. However, just like angel investors, venture capitalists are looking for the next major opportunity, so this is a perfect option for you if you’re ambitious. It is worth noting, though, that it can be difficult to obtain venture capital if you don’t already have a proven track record with owning and operating businesses. It sounds paradoxical, but it’s true.
Many competitions include business funding or startup capital as prizes, so it’s worth looking into this option if you want to take a shot in the dark. Just like with investment or lending, though, competitions will likely want to hear what you’ve got planned for your business, so come prepared. The best and most interesting ideas usually stand a better chance of emerging from a competition victorious, too, so if your idea is difficult to explain or doesn’t focus on innovation, then you may not find this an appropriate avenue for funding.
Think about pre-sales
Pre-sales are a very risky option for funding, so you should only look into this if you’re absolutely certain you’ll be able to deliver on your promises. If you pre-sell products or services to customers and you aren’t able to provide them in the end, you’re going to suffer hugely for it. However, if you’re a hundred percent certain that your product or service is in the pipeline and will be ready to be delivered in time, then pre-sales could definitely be an option if your customers are willing to go along with it. Be sure to fully explain that what you’re selling is a pre-order and won’t be available for a certain length of time first, though.