Nowadays, at least in theory, all you need is a computer with internet access to fund your small business. However, this is a bit harder in practice. If you need money for your startup, you need to have a solid business plan, good persuasion skills, and some patience. Here are some ways of getting money for your startup:
Family and friends
If you have a wealthy family member or friend, you should approach him or her for a loan. However, you need to be ready to share your business plan with the person. Approaching a family member or friend for funds is ideal because the person knows you and is not likely to charge high-interest rates.
This loan deal is loose-structured and allows you to repay the money once your business starts generating profit. If you want a substantial amount of money, you should consider looking elsewhere because the people closest to you tend to offer small amounts.
An angel investor will agree to provide capital for your startup in exchange for some stake in your business. Uber and Facebook are some of the biggest companies that were funded by angel investors. If your business succeeds, you and the angel investor will reap the financial benefits.
On the other hand, if your venture does not take off, the investor does not expect you to pay him or her back. Business angels usually offer their expertise to startups, which means that you will have a better chance of succeeding. You need mentorship and guidance more than you need money if you want your startup to succeed.
This method of raising capital allows you to find money without the expectation of paying it back or the need for collateral. With an angel investor, you can start your business in a stress-free manner.
This method of raising capital requires you to join a crowdfunding platform, explain your project to people, and hope that it attracts several investors. There are different models of crowdfunding, including:
– Equity investment based
If you cannot secure finances through other means, crowdfunding is the best option for you. Moreover, if you have a popular idea or product that will appeal to the masses, this is the best way to raise capital. An influx of investment means that your business proposal might do well because people like it.
Additionally, once people invest in your idea, it is in their best interests to see your business succeed. This means that they will promote your company thus increasing its chances of success.
The main disadvantage of crowdfunding is that if you fail to raise your target amount, all the funds will be returned to their respective owners. Failed crowdfunding efforts might do a lot of damage to an upcoming business. Furthermore, having your business idea floating around a crowdfunding site increases its chances of being stolen.
Loans and grants
Traditionally, business owners approached banks for startup capital. However, it is hard for a small business to acquire a loan unless it holds valuable assets or has a great track record. Do you have a low credit score? Banks tend to deny loans to people with bad credit. If you do not succeed in getting a bank loan, you should consider online lenders. For instance, you research money loans provided by NeedCashNow if you need fast money.
Finding money to fund your startup is not always easy, but the above tips will come in handy. As soon as your business takes off, you can start repaying the loan that you had taken out.