The Art of Financing a Startup

If you are starting a business, financing is almost certainly on your mind. Accessing funds for a new business is hard, and you’re expected to invest your money. But what if you haven’t got any funds but you have what it takes to start a business and become a success?  You’re going to need to be very resourceful!

Think outside the box with how you will acquire enough working capital to keep your new business afloat until the revenue from sales covers operating costs.  Once you’ve got a stable revenue stream, you can approach banks for business loans. Until then, let’s explore some sources to obtain your funds.

Crowdfunding

Depending on the nature of your business, crowdfunding may be a good option. Crowdfunding is a popular method of raising capital for a project or venture by collecting small investments from many individuals, usually through the Internet. It commonly involves using social media and crowdfunding platforms to spread the word and collect funds.

Crowdfunding is available through platforms like IndieGoGo and Kickstarter. These two crowdfunding giants have brought in millions of dollars for startups worldwide, showing no signs of stopping.

Because you receive funds from many people, crowdfunding is also a great way to connect with your audience/customer base, even before you have a product to sell.

Consider it an opportunity to form relationships with the people who will ultimately value your business and be your most long-term and enthusiastic customers.

Government Grants

Another good place to look for money is government agencies and organizations. We don’t often think about government support of small businesses, but many grants and programs exist to help entrepreneurs.

When you really think about it, it makes sense. Governments want their citizens to earn a reliable income. This creates national stability because these people create jobs, spend money, and won’t need to be propped up by government support for their entire lives.

People You Know

You can always ask for money from people you are close to. This is basically crowdfunding in a way—where you ask for small amounts from many people you know, including friends, relatives, and well-monied social connections.

There are pros and cons to asking people you know to invest in your business.  What happens if the business fails? Make sure you have a contingency plan that protects these creditors. Additionally, remember to reward your informal creditors with dividends or interest payments.  Plus, you will need to have an existing plan where you fully refund each loan’s capital amount within an agreeable timeframe.

Partnerships

While you may be keen on starting your own business, entering a partnership can provide benefits like access to funds. Find a business partner who can assist you with startup funds but also allow you to manage the day-to-day operations of your business.

Credit Cards

While not highly recommended, you can use your credit card as a loan if you’re careful.  It will come with a very high rate of interest, so you will want to pay the loan back quickly.  A great way to use a credit card is for small expenses, and the balance is cleared monthly.

There are many types of credit cards, too, including digital credit cards and virtual credit cards.

Of course, you can always get a loan from a bank or venture capital firm. Different institutions will have different loan terms and requirements, but there are so many that a good idea can access that you may be surprised at the sheer range of options available.

There are still other ways to finance your business, but these are some of the most common and exciting. Consider all of your options when it comes to paying for a startup, and you’ll be more likely to find dynamic solutions that give you the best chance to pay the loan back while still growing your business at a steady and sustainable rate.