Are you a budding entrepreneur that wants to see your business idea come to life? Are you ready to take the huge step of making your ideas a reality, and start your business venture? While there are plenty of factors that go into launching a business, funding is perhaps the most important one. You simply can’t launch a business without the necessary funds and, let’s face it, most people don’t have a nest egg of cash waiting to be used. If you’re ready to launch your business and you need to find a way to access funds, these tips and ideas can prove to be extremely helpful.
Can You Apply for a Grant?
While this tip won’t apply to everyone and all business ideas, grants can be an excellent way to get funding for your company. Grants can be given through government funding programs or private businesses, so it’s well worth doing some research. To apply for a grant, expect to be asked for a thorough business plan that you can show them.
Bring In Investors
Another way to come up with the necessary funds is to bring in an investor or investors. These are individuals that will put money into the venture but will then get something back in return, which is often profit shares. This is described as their return on investment. In other words, they are willing to invest but there needs to be something in it for them. They are taking a risk by investing, so that risk needs to pay off.
Consider Using Crowdfunding Platforms
Because we are living in a digital landscape, this next option has become more and more relevant in the past few years. Crowdfunding platforms can be an excellent way to raise money to launch a business or fund a special project. Because the initiative can reach people all around the world, you can essentially raise more funds than a typical in-person fundraiser event.
Givebutter, a fundraising platform, discusses just how effective crowdfunding platforms can be. Not only can they reach a large audience, but you can also hit your goal/target in a relatively short period and without having to give up a stake in your business with an investor(s). To help you understand the concept better, ‘crowdfunding’ is the actual fundraising process whereas ‘platforms’ refers to the mechanism or vehicle through which donations can be made, such as a website.
Get a Partner – Don’t Go It Alone
Just because you came up with an idea for a business doesn’t mean you have to or should go it alone. It can make sense to bring in a partner who will share the financial aspect of things, as well as everything else involved in running a business. You can be equal partners, or they may be a minority share partner. Regardless of what you and your partner decide, it should all be made official with the proper legal work. This will protect each of you should any issues arise.
Venture Capitalists Can Prove Useful
This is another form of an investor, but one that gets a lot of attention, so it’s worth noting. Venture capitalists, also called VCs, typically invest in several businesses. They are always on the hunt for the next big thing, getting in at the start so they can watch their investment grow. For this reason, they can be helpful not only from a funding standpoint, but they tend to have a lot of insight since they have invested in many companies. They know what works and what doesn’t, the red flags to watch for and can read market trends extremely well.
A Small Business Loan Can Be the Most Logical Option
Then we have the most typical and often the more logical option and that is a business loan or line of credit from the bank. These can be harder to obtain since you need to go through an approval process, but at least you’re not having to giveaway profits or shares of the business. You will need to be sure that you can keep up with the repayment schedule, never missing a payment.
During the approval process, some of the information the lender will look into includes:
- Your credit history
- Your business plan
- The risk the business will be facing
- Sales history (not applicable if the business is new)
- Sales projections and targets
Keep in mind that the interest rate and repayment terms will vary depending on the lender so you may also want to look around before deciding.
Launching a business is an exciting time in life; it’s your chance to build something from scratch that you can take pride in and have control over its future. It will be important to address funding early on, looking for the best solutions for the company.