It’s back. That dream of yours to start your own business. And this time you’re going through with it.
As awesome as that sounds, starting a business, even a small one, takes cash. So how are you supplying that oh-so-important green stuff?
While your first thought may be to contact a bank, there are many other financing options for first-time business owners.
You’ll need to learn more about these small business funding options before you can choose the one that’s right for you. So here’s a bit about five different ways you can fund that dream of yours.
1. Look for an Investor
There are people out there who are looking for businesses to support financially. Why? Because a successful business is an investment for them.
As your business sees success, so does the investor.
Finding an investor is one way to fund your new business. This may not be easy, though. You’ll have to be able to show that you’ve got a great business idea. You’ll also need proof of a business plan that’s sure to succeed.
Don’t seek out an investor if you’re still in the early stages of planning. You’ll need to be as convincing as possible, so make sure you have every detail in place first.
Draw up a business plan, know how many employees you need, and forecast what you think your income and growth might be. Once you’ve got a solid business proposition, start searching for that investor.
One key piece of information you’ll need is how much money your startup will require. If you have no idea, you aren’t likely to convince anyone.
Don’t assume you’ll find an investor right off. It takes work, so be prepared for the long haul.
2. Seek Community Support
Think you can get your friends, family, and community to support your cause? Then consider using a crowdfunding site to gather financial support for your business. While it’s a not-so-traditional way of starting up a business, it wouldn’t be the first time someone’s turned to this option.
Crowdfunding is unique in that it gives people a place to come together and deposit funds in support of a common cause. You won’t get enough funding if only your friends and family are interested though. You’ve got to get the word out.
And, you can offer incentives, too.
What types of incentives can you offer? Whatever you can dream up, really. You specify the incentives and attach them to certain donation amounts.
Say, for example, you have the option for someone to donate $100 to your startup. In return, you could offer them $25 in free merchandise once your store opens.
This option is completely interest-free, and it’s fun too. You can get the word out in creative ways, and people who support the idea will likely share it too. The more people you can get your idea to, the better.
3. Seek Out a Venture Capitalist
This option will only work if you’ll be able to provide a quick return on investment. If you can, though, you could find yourself with ample funds to get your business going.
Venture capitalists often offer funding that is industry-specific. Their knowledge of the industry helps them better gauge if your business is likely to succeed or not.
If one is interested in your business, they may just provide you with important information that will help your business get on its feet. You’ll most likely find funding through a venture capitalist if your business offers a high chance of success but also has a high chance of failure.
4. Try Factoring
If your business is already up and running to some degree, you may have sent invoices to suppliers. If this is the case, you’re waiting for money from them that could be used to grow your business.
You can get around this issue by using factoring, or invoice advancing. In this case, a company advances you most of the cash that you’re waiting to receive from a supplier or contractor.
You send an invoice to the supplier. The factoring company then gives you a percentage of that amount of money (usually a high one) so you can continue running your business. When the supplier pays up, you send the money you owe to the factoring company.
This isn’t without some financial obligation on your part. The factoring company needs to make a profit, so they’ll likely charge you a fee of some sort. It may be worth it to keep your business operating, though.
5. Apply for Applicable Grants
Depending on the type of business you’re starting, you may be eligible for grants. These may come from government or private sources.
If our business is driven by science or research, you may be in luck when it comes to this type of funding. Even if you don’t fit into one of these niches, there may be grants available.
Take some time to look for grants that apply to your industry. You may be surprised what you find!
If none of these financing options are available to you, you may have to settle for a loan. If you take that route, make sure you check reviews first.
There are Small Business Funding Options
When you’re ready to start your business, you don’t have to turn to a bank. There are many small business funding options available. You just have to know about them and look in the right places!
Any of these five options could be the key to your business success. Find the option that’s best for you and get that business going!
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