Funding is one of the most common concerns to startup small businesses. Before you go, start looking for funding opportunities, make sure you have your detailed plan ready. You should know that there are more factors to consider in a business than just funds.
To help you out, here are six best and recommended ways to get funds for your business.
Finance your business with your resources and with what you’re willing to risk for your business. You don’t have to risk it all, just enough to get you going.
Here are some ways to finance your business with your resources.
- Personal Savings. Get a portion of your savings and invest it in your business. It’s better to keep it moving than staying idle in a piggy bank or an actual bank.
- Personal Assets. There might be some assets that you can sell and turn it into an investment.
- Side Gigs. Start working out with a side gig and invest your earnings in your small business.
- Retirement Accounts. This applies if for retirement plans only, and it’s your money you’re spending.
The most significant drawback for bootstrapping your small business is you’ll likely have little to no safety net if your business fails. Think about all of these things thoroughly before moving forward.
2. Friends and Family
Some situations require you to call for help from others, which most commonly will be your friends and family. Your friends and family are probably among the best and first supporters you’ll ever get for your business.
However, if your business fails, you might lose both of them as well. Though it’s not always the case, be careful when investing someone else’s money and ensuring that you have their trust.
Various institutions offer different loan programs for different kinds of businesses. You can try applying for their loan programs.
Don’t rely too much on your credit cards and bank loans for funding your small business. For startup businesses, banks won’t usually qualify you for any of their loan programs.
However, if you already have an established small business, they might qualify you for loans as you already have collateral. Bank loans are useful for long-term growth and other vital expenditures in your industry.
Crowdfunding is an online version of asking funds from different people. This usually refers to funds that you usually receive online from a large number of people.
You enter a platform that primarily intended for crowdfunding and post your business idea for people to see. If people see potential in your products, they will give you funds for your startup business. It works more like a donation and takes no risk for your funds, aside from losing trust from the world if you fail them.
5. Venture Capitalists
Venture capitalists refer to people inside another successful business and are willing to invest in another person’s small business. While this may sound so good to be true, it actually works well if you have an established small business and are continually growing in good terms.
Remember, these are people from big businesses, and they don’t want to risk more than enough what they need to invest. They make sure that both of you succeed in your investment.
Try reaching out to them, and you might as well get yourself good sources of funds to keep you moving for a long time.
6. Angel Investors
Similar to venture capitalists, angel investors help small businesses with their financial concerns. Two main differences between these two are their motives and investment amount. Most commonly, venture capitalists invest way much more than angel investors.
Angel investors are usually businessmen, or people working on their own to make substantial incomes. They are generally motivated to help small businesses, and perhaps even advise on how to succeed in your industry. Meanwhile, venture capitalists look for significant advantages in your products or services and the potential to grow in the long run.
The Bottom Line
Always be vigilant when getting funds from other sources and know which ones are reliable and reputable. Don’t rely too much on investing someone else’s money, but spend as much as possible on your own. You need to take risks, but that shouldn’t be a reason to be complacent in your investment.
Maintain a good reputation and keep your business growing!