If you’d like to be your own boss, you’re not alone. Talk to almost anyone, and you’ll hear great business ideas, helpful services, and innovative products that they have in mind for a launch.
But the gap between having an idea and starting your own business is a large one. If you don’t have the money to back up your business venture, that great idea will continue existing only in your mind.
That’s where startup funding comes in. If you’ve never heard the term before, getting a better understanding can help you take the next steps to launch your company. After all, what is startup capital, and how can you seek it for your own business?
What Is Startup Capital?
Also called “startup funding,” startup capital is a formal term for the money you need to start your business.
This funding covers the hefty initial expenses you’ll encounter with any new business. With startup capital, you’ll be able to rent or lease a store or office, pay utilities, hire employees, purchase inventory, buy new equipment, and more.
The amount you’ll need to start your company will vary based on things like your industry, location, and the type of business you’re launching. It also varies based on your vision of the things you need to get started!
How Can You Secure Startup Capital for Your Business?
You can seek startup funding from multiple sources, but the right choice depends on your business’s needs and your current financial situation. Here are a few common sources:
If you’re launching a smaller business venture, you may be able to use your own funds to launch. This may require you to use your credit cards or savings, or you may take out a mortgage on your home. You might also hear this called “bootstrapping.”
Friends and Family
Asking friends and family to invest in your business can be a great way to get funding. However, it’s important to make sure you’re on the same page about what, if anything, the person in question will receive in return for the investment. You’ll also want to be careful about who you choose to invest.
You may be able to finance your initial launch with a small business loan. Like a personal loan, you’ll repay the loan plus interest and fees over a set term. However, it’s important to keep in mind that there are several differences between a business loan and a personal loan, so read this article to learn more.
Crowdfunding can be a great way to seek funds from a wider pool of investors, and it’s a relatively low-risk option. However, successful crowdfunding can require a winning campaign strategy that includes social media and investor rewards, so you’ll need to spend more time setting it up.
Seeking out angel investors is a great way to secure capital if you need a large amount of money. However, the investor will need something in exchange, usually equity or a stake in your new business.
Consider Your Funding Options
Now that you’ve stopped wondering, “What is startup capital?” it’s time to go out into the world and get yours! Consider your funding options, including the common options above, and work to narrow down your choice. With the right startup funding, you’ll be able to launch your big idea to rousing success.
Want more of the finance tips you need to get ahead in life and business? Check out our other guides for more insights.