Finance can be one of the biggest challenges when starting a new venture. Thankfully, more and more methods to finance business have popped up over the years. Consider one of the ways below to get your business up and running.
Take a Business Loan
Getting a business loan is the most direct way of financing business that most of us would think of first. However, with most banks becoming stricter with their loan requirements, you will need to have an excellent personal and business credit history to have your loan approved faster.
Thankfully, many alternative lending companies like fintechs and online lenders can give out business loans on more lenient terms so you can still quickly obtain funds at a reasonable cost.
However, you should perform some research into these establishments, as well as their credibility and loan terms. You don’t want to deal with loan sharks and have your collateral fall into the wrong hands.
Find Angel Investors
Angel investors are hard to find because they need to see the value and growth potential in your business. However, if you can find one, they can provide money, guidance and expertise to help your business start and grow.
If you are lucky, you might find investors with funds, industry experience and networking contacts. Angel investors fulfilling all three criteria can help your business grow much faster.
Business start-ups built around specific products will find crowdfunding a good source of funding. If your products are promising or exciting to the public, your business venture could get much more than the required costs to get started!
Crowdfunding platforms such as Kickstarter and Crowdfunding are easy to access and you only need to put your business idea and details to get started.
If you’re using these platforms, be sure to include different media – videos, pictures, infographics and statistics to show the audience why your product is going to be the next big thing.
Access Your Retirement Funds
If you have worked enough to stash away some retirement funds, you can tap into these savings to start your business. As long as you follow the protocols, you should be able to access these funds easily.
Try to keep this as a last resort, since you are going to need these savings in your golden years.
Pledge Your Future Earnings
It is possible to pledge some of your future earnings to your business investors. These investors will have to provide you with an upfront venture funding, and in return, they get to have a percentage of your future lifetime earnings.
The legality and enforceability of these contracts are not fully established yet but they are still worthy of consideration as an investment method.
Finding a Business Partner
If you have friends or family members with industry knowledge and capital to start a business, why not consider bringing them into your business, too?
Have a written contract about your roles and what happens when one party does not hold up their end of the deal. When these terms are defined well, a business partnership can be beneficial to your business.
Hold Product Pre-Sales
Is your product fully developed? Consider running a pre-sales to help your business take off. The profits from these pre-sales can be used to help fund your business so that you will not need to take out a hefty loan.
Holding a pre-sales event may also help your business gain some new fans and brand awareness so your business can be seen and known.
If you have previously promoted your product on crowdfunding platforms, you can provide discounts exclusive to your project backers.