Statistics indicate that a good number of new businesses fail due to a lack of enough funds. Before running your startup business, ensure that you have enough capital for its operations. Cash flow is vital for any business but unfortunately, most owners struggle with where to source money for their startup. This article will give insights into various ways you can fund your new business project.
It’s important to note that the method you choose to raise money for your new business will affect how you run and structure it. Research and analyze your business to know the amount you need to avoid halting your operations.
After knowing the amount you require for your new business, use the following funding options to raise it.
Another name for bootstrapping is self-funding. When you think of starting a business, it is a wise idea to start saving for it. You could also sell your property that you’re not using to raise the capital. What’s exciting with self-funding is;
• No long and tedious procedures to follow
• No costs involved like interest rates
• Easy to raise
• You do what you want
• It’s a good point when looking for investors in the future
Besides, funding your new business is fulfilling and satisfying. But it would be best if you had a concrete business plan and commitment to succeed. If your self-funding is not enough, especially if dealing with a mega project, you can move on to other forms of funding to raise the balance.
2. Friends and Family Can Also Help
It’s easy to walk up to a relative or friend and request money than strangers. Some families and friends are very supportive. Identify those who have money and can help you. Then make a good plan for your business and reach out to them. Explain every detail and how the project will bring profits and benefit other people.
Some people may give you the funds for free, while others may want you to refund it at various intervals. In case you need to repay the money, agree on whether it’s interest-free or not. Be on the same page with the person on when and how to refund the money.
The best thing about funding from friends and families is that;
• The whole or part of the money may be free
• You may not have to pay high interest if at all it’s required
• It may involve fewer or no procedures
• You may incur none or less associated costs such as processing charges
• You may not get the pressure of refunding the money when a delay or problem arises
3. Borrow Money Online
Thanks to the advent of technology, you can now borrow money from various reputable online platforms. Carry out research first to determine the most reputable one that will meet your need.
Some online financial institutions aim at making profits and don’t bother about their client’s development. Consider an online funder that keeps its clients’ problems at heart. If an issue like late debt payment occurs, the funder should give you time and not harass you.
Other credible online business funders offer advice and organize business training frequently to boost their clients. The online money lenders could be private business entities, government agencies, or banks. If you have a bank account, check whether that financial entity offers loans online.
Alternatively, you can decide to plea for financial help online via various platforms like social media. Showcase your case in detail, and well-wishers will support you. If you convince them well and they see the authenticity of your business, people may entirely or partially fund your new venture. Funding options are unlimited online.
4. Angel Investors
Angel investors are like ‘saviors’ to new businesses. They are individuals with the extra cash they want to invest in new or upcoming companies. The angel investors come together through platforms and unite in screening the proposals.
Significant and potential business proposals receive funding alongside other benefits like advice and mentoring. Did you know that angel investors funded large and reputable companies like Google, Alibaba, and Yahoo?
Angel investors only invest in a company’s early stages and request a certain percentage of its equity, like 30%. It makes them your business partners! It’s like they take risks for higher returns. Before reaching out to them, consider if you will be comfortable with their terms.
It is a new way of funding that has recently generated lots of publicity and popularity. With this method, you receive funding from different people at the same time. You and the investors meet on a crowdfunding platform.
On the platform, you should illustrate all details of your business, such as;
• The plan
• Profits expected at different growth stages of the business
• The capital amount you want
• Why do you need the funding
The funding members on the platform will respond based on your information. Some may give you part or the total amount for free or with conditions. Some may want to buy your products after investing, or you repay their money with interest.
Benefits of crowdfunding include;
• No brokers involved
• You can get immediate buyers of your new products
• You can receive donations and free funding
• It’s an excellent platform for long-term investors
But for you to benefit from crowdfunding, your business must be very competitive.
As illustrated above, you need money to start a business. Without enough capital, your new business project can fail. Fortunately, there are many ways you can raise capital for a startup business, as described above.
Engage in one or more ways that will work for you. Also, ensure that the funding options meet most of your needs. The best way to identify a reasonable lending option is by conducting research and choosing the most trusted ones.