One of the biggest challenges of launching a new business is finding the cash to get things started. Fortunately, there are options besides winning the lottery or receiving a large inheritance, including small business loans, credit cards, bootstrapping with retirement savings, seeking private investment, and crowdfunding.
When it comes to funding, there isn’t a one-size-fits-all approach. Depending on where you’re at in your business, what type of funding you are seeking, and the amount you need, where you’ll look can vary widely. We’ve compiled a list from a variety of places to help you research and narrow down the options that are best for you.
Before we examine the various funding sources, here is some general advice on preparing to finance your business pursuits.
Over the last two decades, several crowdfunding sites that allow entrepreneurs opportunity to seek funding for their ideas have sprouted over the internet. In most cases, you only need to create a funding campaign that you can them pitch to family and friends through social media. In most cases, compelling pitches go viral fast thus attracting enormous contributions from individuals across the globe. Note that if you are to make a kill with your funding campaign, make it clear to the contributors how your idea will support the community as an asset.
Angel investment remains one the most realistic and feasible for entrepreneurs that don’t need long term business partners. Family and friends come in handy in identifying a trustworthy angel investor, pump in capital into your small business with the promise of payback of their investment plus interest. However, if your angel investing pitch is to fruition, you need to master your business plan and back your valuations with real projections. Additionally, note that such transparent relationships must be based on trust.
Kiva is a great example of an outline portal for microloans. If you only need a small amount of money, particularly if you are a minority-owned business operating in a developing nation, working with one of Kiva’s field partners could be a good route.
Governmental grants and loans
Most governments of the world understand the role small businesses play in their economy. These governments thus set up elaborate financing schemes aimed at funding these small outfits. However, only a handful of individuals end up benefiting with such loans and grants either due to ignorance or the bureaucracy in accessing them.
Therefore, as an entrepreneur, you need to spend more time learning of these government loans and grants from your local banks as well as the internet. Note that to beat the lengthy, and often frustrating, process of accessing these funds it is advisable that you work with loans and grants specialists.
Enlist Private Investors
Persuading others to share your dream and back you financially is a popular tactic for obtaining business funding.
Work with legal counsel (and possibly a business mentor) to clarify the roles you are prepared to let individual backers play (or not play) if they agree to provide you with funding. Get it all in writing, and do all you can to set clear realistic expectations.
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