There are lots of challenges prospective business owners and budding entrepreneurs have to overcome. They need to market test their idea and prove that there is a need for it, they need to decide upon pricing and they’ll also have to consider whether they need additional employees (and where they’re going to find them).
But the utmost concern for most is how on earth they will fund their business. While the above questions are still important to answer, figuring out the finances of your company is what you’ll need to do to get it off the ground.
Bootstrapping is where you fund a business using minimal resources; usually your own savings. Bootstrapping is usually done when you have no other funding options or would prefer to fund it yourself. But it does require you to work your socks off, scrimping and saving to put away every spare penny you have into your business. You’ll also have to cut back on extra, unnecessary spends such as going out for drinks or going to the cinema. It’s possible, but it isn’t easy.
Apply for a Microloan
Depending on how much capital you need to get your business off the ground, applying for a microloan may work for you. It is one of the most popular funding options for small businesses as it allows you to get a loan for a relatively small but important sum of money which you can pay back in monthly instalments. This is ideal for growing small businesses who are unable to put up collateral for other forms of funding and/or unable to wait the lengthy amount of time for a more substantial bank loan to be approved.
Crowdfunding is a form of business funding that relies upon the interest of your potential market. You will be able to not just generate interest but you’ll also get would-be customers to put their money where their mouths are, giving you the cash to develop your product. However, there are considerable downsides to the crowdfunding route, namely that whatever platform you go with (e.g Kickstarter), they will take a cut. There’s also an approval process and, if you’ll have to work hard drumming up support from publications and on social media.
Attract Angel Investors
An angel investor is someone with a lot of money who believes in your business and gives you money to get it off the ground. You can find an angel investorby networking at industry events and conferences. But you need to have an extremely detailed and well-prepared business plan so that the numbers shine as much as your passion does. If you need a lot of money and don’t mind giving up a stake in your business (angel investors generally ask for equity), then consider this route.
Get help from friends and family
Our final tip is to seek help from friends and family. Asking your friends and family for helpisn’t ideal because they may have expectations that you are unable to match and while it’s a good idea to use paperwork to make everything formal, they may be put off by this. But if they believe in you and your business and your goods or services somehow solve a problem that they have, then they may be an ideal funding source.
Getting your business funded is hard work; it’s what separates startup successes from, well, those that aren’t a success. But if you’re smart about your funding options and managing your finances, you’ll be well on your way to achieving your goals.