One of the biggest challenges for small business owners and entrepreneurs is how to find funds for launching and eventually growing their businesses. Many people usually have good business ideas but implementing them becomes hard because they lack capital. Here are several ideas for funding your startup:
In the initial stages of coming up with your business idea, you should use your own financial resources. If you have any money in a savings account, make sure that you use it judiciously. Be careful with your personal credit cards to avoid maxing them. However, if you have access to large amounts of money, you can start your business comfortably without pinching pennies.
Family and friends
If you do not have enough money in your savings account or credit cards, you should consider asking your friends and family to invest in your company. You need to make it clear that their money might not be returned. This way, they will make the right decision about giving it to you. In most cases, your family and friends will just invest in you, not your business. They should all think about the investment as a grant with no strings attached. If your business succeeds, you should reward the risk-takers.
If you have not heard about crowdfunding, then you must not be familiar with the online world. Crowdfunding takes the friends and family investment option up a notch. It allows a pool of investors to contribute to your cause. All you have to do is set up an account and ask people to help you. This idea is great for people who do not qualify for bank loans. If you do not want to wait until the last minute, you should start asking for funds early. You will find many crowdfunding sites online. GoFundMe is a very popular example of such sites. You can find others like gofundme alternatives online.
Venture capital / bank loan
In the later stages of expanding your business, you might need a bank loan for various reasons, including long-term growth and operating capital. To secure this loan, you need to provide financial institutions with your financial information and that of your business. Banks need collateral to guarantee and secure loans. To begin the process, you need to engage with the financial institution during the earliest stages of your enterprise. At first, you should start a merchant or checking account with the bank to develop a good relationship. Over time, the financial institution will become familiar with you and your company, making it easier to secure a loan when needed.
For extremely fast growing enterprises, venture capital funds are needed for hyper growth. Again, the investors who have money to deploy will conduct due diligence to determine the viability of your company.
When your business reaches the next level of growth, you should approach angel investors for funding. This well off individuals will provide capital for your startup in exchange for ownership equity or convertible debt. You can find such investors on the internet and in most communities. After performing their due diligence, these investors determine whether your business meets their requirements. If it does, a meeting is scheduled to gather more data. At this phase of the business, angels usually become serious investors, with high expectations, who want solid results.
If you keep all the above funding strategies in mind and develop a solid business plan demonstrating the value of your company, you will boost the odds of finding the capital that you need.
Title: Super-Connector at OutreachMama
Wendy is a super-connector with OutreachMama who helps businesses find their audience online through outreach, partnerships, and networking. She frequently writes about the latest advancements in digital marketing and focuses her efforts on developing customized blogger outreach plans depending on the industry and competition.
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