Your own business may start as an idea, but it takes money to make it a reality. It will take a specific amount of capital from product or service development, acquiring equipment, and hiring staff. Even existing businesses may need funding to rebrand, launch a new product, or to get new supplies for the operation. You may wonder, where does one get the money to make a business startup lift off the ground?
Get The Funding You Need
Gathering funds to start a business or keep one afloat may seem intimidating. However, there are proven ways how you can get what you need when you have a clear vision and a plan.
1. Determine How Much Capital You Need
It pays to research the business you’ve been dreaming about. Read newspapers and magazines about entrepreneurship or go online to get as much information as you need and save time. List down everything you will need and consider what would work even as a startup. Find a place with heavy foot traffic that you can rent. Call suppliers and inquire about licensing and permits from your local government. Look for import finance options if you’re looking into bringing in goods from outside the country.
If you already have a business, layout all the pros against the cons and rearrange your current processes. Regroup with your staff and brainstorm. Get rid of old ideas and methods that are blowing up costs and wasting money. Work with an accountant to clean your books and update your accounts.
Once you have a concrete business plan in tow and an estimate of the business capital, determine next how much money you already have or how much more you can scrape by. It could be your savings, your home equity, your 401k, and what assets you have ready for liquidation. Bootstrapping allows you to keep whatever income you can make from your business so you can expand it even more. It also helps you avoid making loans that you will have to keep paying periodically instead of refunding your business.
3. Seek Out Family And Friends
After pooling in from your funds and you still don’t have enough, you may approach any of the closest people in your life. Tell them about your vision and the business proposition. You will need to convince them that investing in your business will be profitable for them as well. Make sure that you have a mental note on the realistic approach you mean to make. Your family members and friends might want to take a chance on you if they knew you well enough.
4. SBA Loan
The Small Business Administration sets the guidelines to partner lending companies to make it easier for them to provide capital to small businesses. While they do not give money directly to entrepreneurs like yourself, they make sure that lenders are offering affordable repayment rates and flexible requirements for non-guaranteed loans. Sometimes, they even provide education and support to qualified business owners.
5. Borrow From Banks Or Lending Institutions
Your next move is to inquire at a bank or lending company about your options. What you need to remember, though, is that banks will require your details and will depend approval base on eligibility. It may take them a while to decide whether they should let you have the money. With lending companies, be sure to search a good reputable one before coming to apply for a loan.
6. Use Crowdfunding
There are legitimate websites online that allows people to create fundraisers for different causes, projects, and small businesses. It is a way for donors to see which fundraiser is worth their money. You will need to create a free account, add your details, and of the business you want to start, and whatever your plans are. People are most likely to donate money if they can get perks depending on how much they can afford to give. If you can, you can set up those perks, too. Just be sure that you can deliver what you promised.
7. Potential Investors
Angel investors and venture capitalists are more likely businessmen and women who like to take chances on up and coming businesses with a potential for growth. They will provide the capital, in exchange for equity, or a portion of the company where they can partake in and partially run as their own. If you do find such individuals, make sure that all of you involved having a clear understanding of the business and the shares you have in it.
When you understand your funding options, you can focus on planning your business as it requires careful considerations. Money coming in from outside sources other than your own may affect your business in the future since you will need to give it back if it is from a lending institution. Many business owners fail to consider the ramifications initially, causing their business to fail for lack of funding. Make sure to do your diligence and cover all your bases when asking for funding. It’s to ensure that your business will gradually grow along with the income and continue to pay back what you owe and enjoy the fruits of your labor.