Money, it is what can keep a would be entrepreneur from becoming a business owner. When you have the desire to start a business but lack the capital there are several things you can do to help fund your start-up. Before you start looking for financing you need to have an effective business plan along with financial statements before any potential investor will give you the time of day. Bank loans for business are harder if not impossible for many potential business owners to secure, here are some other ways to get funding for your start-up.
This is a new way of securing funding that the internet has made possible. Instead of having just one investor you can have multiple investors all contributing various amounts of money to help you get your business of the ground. Websites such as Kickstarter or Indiegogo can help you kick off your funding campaign. You put together a description of your business, your goals, how you plan to make money along with how much money you need and how you plan to spend it. Bear in mind that most Kickstarter campaigns remain unfunded, you need to be very creative in your campaign to attract both money and attention. Here is how to set up your own Kickstarter campaign.
Venture capitalists are money guys that look for start-ups to invest in, and for many these are the ideal type of investor. There are downsides to working with venture capitalists, first you need a sound business plan in place and they usually look to invest in larger start-ups. Facebook and Twitter built their businesses using venture capital while the average neighborhood plumber or restaurant owner doesn’t.
Find an Investor
Investors work like venture capitalists only on a much smaller scale, think of Sharktank as an example. Just like on Sharktank they are going to take ownership of a portion of your business. In effect you end up with a silent…or not so silent, business partner. This isn’t necessarily a bad thing as you keep control of your business, you not only get money but oftentimes you get a mentor as part of the package.
Small Business Loans
For many entrepreneurs this is the first place you go to when looking for business financing. The government has put together a whole department to help you get business funding. The problem lies in cutting through the red tape and mounds of paperwork to qualify for a loan. For a first time business owner with very little credit history a small business loan may not be possible.
If you have a solid credit history or you’re a home owner that may open up the possibility of financing your own business. This is risky and be prepared to be obligated to pay back these loans whether your business meets income projections or not. If you can make it work it can be the best option, you have complete control over your business without unwanted partners.