If you already have the product and the business plan and you are looking for ways to fund your future business, then you certainly know that startup funding is the hardest part, as money doesn’t grow in trees – unfortunately! However, there are several ways in which you can raise the necessary capital that is essential for starting a new business. Having said that, here you will find the top 5 ways to fund your start-up.
1. Savings Accounts
If you have a savings account for rainy days, then it is time to use it to partially fund your startup. This way, you will get a small amount of money with minimal risks and reduced costs – after all, this is your money! Make sure to leave some money in your account, just in case. Better to have it and not need it than the other way round!
2. Close Friends Or Relatives
Borrowing money from your close friends and/or relatives is certainly one of the best and safest ways to get the money you so much need. You do not have to ask them for a large sum of money – a small amount should be enough, as you can fund the startup from other sources as well. Make sure to remind them that you will pay them back as soon as you start making a profit – nobody is keen to lend money without knowing that they will get it back, sooner or later!
But be very careful with this approach to funding. As our friend Dave Ramsey is famous for quoting … “the borrower will always be a slave to the lender” (Proverbs 22:7). And this brings particular issues when dealing with family and friends because it inherently changes the dynamic of the relationship. There are many a story out there about money being lost or never repaid and it damaging relationships for a lifetime.
3. Attract Investors
This is by far the most convenient way to fund your startup if you need large sums and you have a rock solid business plan. There are many investors out there who are willing to give a helping hand to startup entrepreneurs! Angel investors for example help start up companies providing that they see potential.
Bear in mind that these are experienced professionals and are not eager to invest in just any business unless they are sure it is worthy of their time and money. This is why you must have a clean, clear and concise business project to present, otherwise your efforts are likely to be in vain!
In a nutshell, crowdfunding refers to the collective efforts of people who pool their money to support the efforts initiated by other people. For example, Kickstarter is the largest platform for project funding in the world, so you might want to take it into consideration if you want to fund your startup quickly and get some free exposure too!
5. Bank Loan
Last, but certainly not least, a bank loan can be a life saver in the startup funding process if you have tried all the above-mentioned options and none of them worked or if you prefer to take the risk and keep the premium as well. However, you will need to consider the interest rates, and the fact that you will need a collateral.
To sum it up, it is important to know that as a future business owner you must never rely on a single source of income or funding. Make sure you have at least two different funding sources, as back-up plans are essential in case something goes wrong!