If you have the entrepreneurial spirit inside of you, odds are that you’ve always wanted to open and start up your own business.
Maybe you have several different ideas and are trying to filter it down to one. Perhaps you’re just waiting for the right idea to spark and start a business around it whenever that day comes.
Regardless of your inspiration, one of the parts you’re probably most curious about is the different sources of funding. In other words, how are you going to get money to start it?
Here are several ways you can pursue funding for the small business that you want to start.
1. Small Business Loans
One of the best ways to get a loan for your small business is and always will be to apply for a small business loan.
The trick is. to find a provider or lender that is understanding of your situation. Some will offer you the amount you’re looking for but expect an instantaneous return. Others won’t be able to offer you the full amount that you need.
Either way, it can be tricky to find a happy medium. Fortunately, SBA financing can be an incredible option for you.
It offers a small business loan with extended payment schedules to help you pay the full amount in a way that won’t strain your budget. It also has terms that are favorable towards the small business owner.
The small business administration wants to see small businesses succeed. So while other lenders are only interested in their own agenda, the small business administration wants to see what your company is fully capable of.
Maybe the funding for your business won’t come from one all-encompassing angel with a massive wallet. Rather, it may come in the form of several angels all pitching in to help you start things up.
Crowdfunding is a great way to get people to back up your idea and collectively build up money towards your goal.
You can use sites such as Patreon, GoFundMe, Kickstarter, and Ulele that are all trusted and have great records of success.
Simply pitch them your idea and list out a few concrete steps for your plan. Then, if people believe in your idea and plan to be legit, they can pitch in money. It’s a great tool for those that want to see the power of community bring your idea to fruition.
3. Ask Your Friends and Family
Why try to convince anyone else of your entrepreneurial spirit when you can fund through the people that have seen it grow inside of you your entire life? Under the right circumstances, your family and friends might be interested in helping you out.
Granted, this isn’t a route that you should take if you need tens of thousands of dollars to get things going.
But if your dream of starting a business is only a few thousand dollars away from becoming a reality, your family members will try to help.
Consider this, however… it’s one thing to owe business money who is financially prepared to make investments in companies such as yours. It’s an entirely different feeling to owe your own family members money.
Try thinking of ways to get them involved in their investment. Maybe you can make them part owners as a result, maybe even hire them as an employee one day. Or do it the old fashioned way and pay them back once your company makes a profit.
4. Angel Investing
Perhaps you want your source of funding to challenge your company. You want someone that will keep you accountable for the daily operations of your small business.
If so, finding an angel investor can be a godsend (pun intended) for your new start-up business.
Generally, angel investors have a lot of experience in starting companies of their own, so the mentorship and leadership you would get. However, it can be tricky to draw that line in the sand.
Some angel investors, although they mean well, can get too wrapped up in the inner workings of your business. If you’re working with an investor that’s hands-on, you’re setting yourself up for a wild ride.
It’s all about finding a balance and setting that expectation right away. If that doesn’t sound fun to you, then an SBA loan would be best.
5. Use Your Retirement Savings
Maybe you’re the type that doesn’t want to be in debt to anyone. You believe in your idea, so much so that you’d be willing to take a risk with your own money.
If that’s the case then you can tap into your retirement savings using a rollover as a business startup (ROBS for short).
Granted, you’ll want to make sure you have someone in both legal and financial expertise to oversee this process for you. You’re essentially having the retirement plan purchase shares in your company, so it’s a great way to be your own owner.
Be warned, this is a difficult and strenuous process and should be handled as such. You don’t want to make a move that compromises your future.
Find the Sources of Funding That Are the Best Fit for You
Every small business is different. The sources of funding that work for one business owner may not be the best situation for you.
What’s important is that you consider all of your options, weigh them all out, then act upon the one or two that work best for your situation.
Be sure to browse our website for more financial articles to help you live your best life.