New entrepreneurs often have to deal with the issue of funding when trying to build the foundations of their businesses. You could have the greatest idea in the world, but if you are unable to attain the capital needed to bring it to the right audience your business may not succeed.
So how do you go about doing this? You have the business plan in place and you know what you need to do to keep customers happy, so let’s now look at some of the best ways to fund your small business endeavors.
Bank loans are amongst the most common ways to fund a new business venture, but they carry with them a number of complications that you will need to consider. For one, any bank that considers lending to you will need to be convinced that the business’ aims are feasible, which usually means a strong business plan and presentation to lenders is in order. You also need to consider the interest that goes along with such a loan and may have to deal with difficult financial climates, depending on when you start the business, which could affect your prospects in terms of getting a loan approved. However, banks that offer small business loans are an excellent starting point and should be considered, even if you don’t end up using them.
Boot-strapping is the process of getting your business off the ground by funding the essentials yourself. It’s not always the most attractive way to get started, but it does show that you are committed to the company in more than just words, which can be a massive boost when you do seek other types of funding. Thankfully, there are a number of ways you can make boot-strapping a little easier. 0% interest credit cards are ideal in such situations, but they can be hard to find without the right advice.
If you have ever seen the show Shark Tank – also called Dragon’s Den outside the USA – you may already be aware of the concept of ‘Angels’. These are business investors who can provide funding, often in exchange for a share of the company so they can reap the benefits later on. Thankfully, most Angels in the real world are not as intimidating as the ones on the show. However, you will need to present your business to them, taking care to convince them of your own passion and the prospect of profitability. You will also need to come to terms with the idea of giving a portion of your business to somebody else, which can often be difficult for new entrepreneurs.
Friends and Family
Those closest to you are the ones who are most likely to believe in your vision, which also means they are the most likely to provide you with funding. This is not always an avenue that is available to new business owners. However, if you already know somebody who has the capital and experience required to help you along your way, there is nothing wrong with making a few enquiries.
Small businesses are often referred to as the ‘backbone of the economy’, which means many local organizations and governments offer grants that can be used as start-up capital for new companies. These will vary depending on where you are in the world and, in many cases, the current governmental situation. However, you should be aware of any grants that could be available to you and how you go about applying for them. Best of all, grants usually don’t need to be repaid, but you will still need to make a convincing case for why your business deserves one.
Crowdfunding sites are gaining in popularity every day and they are an excellent source of funding for entrepreneurs who have novel ideas that fulfill the needs of consumers. The key with crowdfunding is to engage with your audience. Explain why your business idea is something they need in their lives and keep communicating with people who give money to the campaign to show how much you appreciate it and what progress you are making. Most successful crowdfunding campaigns also offer incentives to contributors, such as products in exchange for their money or meetings with the people behind the business. What you offer will depend on the business concept, but it is crucial that contributors feel like they are getting something in return.
Corporate venturing is not for everybody. It involves giving over a certain degree of control and direction in your business in return for funding and resources. However, it does offer you access to experience and opportunities that may not come so easily when going it alone. With the right partner your business may not need to worry about issues like office space, marketing and funding, though you will need to be concerned about the role your corporate ‘incubator’ plays in making policy decisions.
The Final Word
All of these funding opportunities should be considered by small businesses as a means to an end. They allow them to create the foundations for future growth and ensure their services reach the right people. BankClip is also here to help and can provide a range of financial services and advice relating to the topics covered in this blog post. If you’d like to find out more, contact me at [email protected] or use one of the contact forms on the site to get in touch with a member of the team.