According to ForEntrepreneurs and other sources, running out of cash and unable to raise funds is why startups fail, and the best way to avoid being another statistic is to have a robust funding plan in place ideally before your business starts trading.
Raising funds for startup businesses is challenging so here’s a list of funding types your business may wish to consider.
Now that the Internet has become an integral part of our daily lives, the funding options for new business owners have reached new horizons like crowdfunding. There are a number of crowdfunding operators that will allow you to present your idea to potential investors, and seek investment but you’d better make sure your ideas are worth backing. This is easier said than done, but generally speaking, your business idea needs to show merit by having a target market in mind and provide a solution to people’s problems or answer a growing demand. As long as you bear in mind there are certain restrictions all cloud funders are required to abide by, you should be fine.
While government grants for small businesses are an option you should consider, it’s important to understand that most governments tend to be very stringent with their conditions, mostly because the funding for small businesses comes from the taxpayers’ pockets. In order to get approved, the goals of your company must be closely aligned with specific agency agendas, such as the Department of Energy or the Department of Agriculture. As a general rule of thumb, if you’re involved in R&D, you may stand a chance of getting approved.
Small business lenders
Small business lenders are essentially non-banks and investors. There are too many to list here and they come and go, so it’s best to just ‘google it’ for a list of providers which will include the ‘paid advertisers‘ and then the ‘organic results’ listings. But generally speaking, these loans will need to be secured by assets of some form, and the interest rates are generally more than a traditional bank.
Yes, even the traditional banks are open to giving loans to startups, and are generally friendly towards new business owners, especially if you can make a strong case about your company benefiting the society or the local area in some way. However, they tend to require some form of guarantee that the loan will be repaid or at least a good track record.
Finding a reliable business partner who believes in your vision and is willing to back you up with their hard-earned resources is one of the most valuable assets you can have. The partner you choose to work with may or may not become and employee in your new business. In any case, if you don’t know anyone who might be suitable, it means you should network with other business owners more. Getting into a business partnership will take due diligence, trust and a clear plan for success.
Securing the much-needed funds for your business is no easy task. But with enough persistence, discipline, and doing some proper research, it can be done.