Yes, starting a business is never easy, but sustaining it to the point of success is even harder, especially considering the highly competitive nature of the business world today. But let’s be honest, funding is one of the biggest challenges most entrepreneurs face when starting a business, and this often continues to be a major pain in the bark for a few months or years after takeoff. The good thing is that when it comes to money matters, there are several ways to acquire funds to start your business and keep it afloat at least until it starts generating enough revenue to run itself. But assuming you have a great business idea and you’re a bit stuck when it comes to raising enough money to actualize it, how can you go about the entire thing.
Well, here are a few pointers highlighting reliable funding options for your startup.
Seek A Business Loan
Unless you have that big fat savings account to draw funds from, or you’ve just sold a huge asset from your inheritance, a small business loan would be one of the most realistic ways to fund your startup. However, the slight downside is that as a small business, banks will be very strict before offering you a loan. Most lenders will need you to have an excellent credit history and some assets to provide as collateral before you’re approved for a loan. Alternative lending companies are also available, but you’ll need to be extremely careful because some of them can be predatory. If you’re so determined to get your business off the ground in Australia, Simon Isaacs from ebroker.com.au suggests comparing loans from various lenders before deciding on which one to borrow from. Especially if you’re looking for running capital, seeking a business loan can be your best option to fund your startup and achieve the growth you so much deserve.
Another popular way to fund your startup is by trading equity or services. This involves offering another person a portion of your business, say 20% for injecting a certain amount of money for operating or starting capital. You could also promise to offer your services (such as marketing) to another business or company in return for funding your business. It’s quite a reliable option but the small caveat is that it can be a bit difficult to find someone interested in such a deal.
Crowdfunding campaigns are among the most common ways people raise funds for their startups. It’s all about having an amazing business idea, pitching it to the masses over social media or the internet. Every single coin counts and as long as you have a brilliant business idea, you could even raise more than you needed.
Seek Advances from Strategic Partners or Customers
If you have identified a potential business partner or a major customer, you could also pitch your business idea and see if you can negotiate some advance funds to see your business development through. On this note, you can also consider white label agreements or early licensing, especially if you’re dealing with a particular line of products and don’t have enough capital to manufacture it.
Startup incubators and accelerators
Mostly seen in universities and business schools, startup incubators are another great way to fund a startup. Most of them are non-profit organizations that provide free to low-cost resources to help startups to take off and grow. Alongside resources such as workspace, office equipment, consulting, and training, some startup incubators also provide seed funding, which you may or may not be required to pay back once your business starts generating enough revenue.
If you’ve watched Shark Tank, you already know who venture capital investors are. They provide funding to qualified startups upon assessing your business model and seeing the potential for growth. This means that to get funding from venture capitalists, you’ll need to be really convincing with your business plan.
Bootstrapping is another popular way to get a business off the ground. It involves injecting your own funds into your business, which could come from personal savings, selling a major asset, home equity lines of credit, and even credit cards. The downside, however, is that not everyone may have enough savings or credit to bring their business idea to fruition.
Try Friends and Family
From your close circle of friends or family, there’s a huge chance a few would love your idea and lend you some money to fund your business or be part of it. This one works especially for startups at a very early stage.
Finally, you could also conduct research to see if there are any organizations, companies, and government bodies providing small business grants. All the same, starting a business and running it smoothly to the point it becomes a household name is never easy. It requires staying afloat, and the above are just a few reliable options you can consider when looking for funding for your startup.