Nothing is quite as hard as raising capital to start a business. It’s one aspect many aspiring entrepreneurs struggle with and find difficult to overcome. Fortunately, you’re not alone, and what that means is that there’s a myriad of ways to generate capital for your idea. All it takes is a little bit of cleverness, plenty of research, and you’ll eventually find it.
Here’s where you can get started:
Fund it Out-of-pocket
Any seasoned businessman will tell you that funding a business venture entirely out-of-pocket is too risky. Many small business owners agree that opting to take out loans and other financing options instead. But funding a business out of your own pocket isn’t exactly an impossible task. This technique is often called bootstrapping and is a good choice to start with as you have full control over every facet of your business. It will force you to learn quickly and be highly efficient as you’re directly responsible for yourself.
Another benefit to bootstrapping your business idea is that you won’t owe anyone anything- at all. Traditionally, bootstrapping a business idea is common, but as inflation caught up with everyone and many young entrepreneurs don’t have the initial asset, other forms of financing the capital came into the picture.
Apply for a Grant
The government stands to benefit from new businesses, and so they’re encouraging citizens to start their own businesses! They do this in the form of a business grant. The criteria for qualifying for a business grant can be rather strict and often fall in a very specific industry, like medical research, sustainable manufacturing, and energy, or nonprofit drives. But should your business idea fall anywhere there, it’s definitely worth a shot.
Look Into Crowdfunding
Thanks to the internet, there are multiple ways you can connect with other people- and coordinate with them financially. Almost everybody has heard of crowdfunding at this point, and some might have even participated in one. There’s a lot of websites such as Gofundme, and that’s the best place you can start. As long as your idea is profitable and appealing enough, people will want to support you. And if you’re able to find a way to offer something tangible, like “backer rewards” or exclusive merchandise, more people will want to support you. Similar to bootstrapping your business, crowdfunding leaves you with control over your own company- but many credit their initial supporters out of respect.
Get a Small Business Loan
A conventional way of funding your business dream is through a good, old business loan from a bank. It remains the most popular way to finance a new business and is a very solid option. However, it’s important to remember that you’re most likely to be approved for a small business loan if:
- You have good credit
- You’ve been in the business industry for at least two years
- Your business idea is a profitable one with strong revenue projections
Different banks would have different rules and standards, so you might have to read about it before you apply. But still, a business loan is a viable way to kickstart your idea.
Gather Support from Friends and Family
“Support local businesses, support friends and family” You’ve probably seen people post something along those lines on social media. But in business, people actually get support from friends and family! There’s no shame in asking for help, and in many cases, the ones closest to you are excited to see you succeed. Consider asking your immediate family.
Of course, it’s not just a matter of asking them for money- it’s still a great idea to pitch a proper business plan to them. Not only will you likely convince them, but they will be more willing to support you and your cause because you have a plan. Alternatively, you can also offer them equity in your business, or even treat it as a loan. Regardless, it’s still best to document everything to protect both of your interests.
Hunt for Angel Investors
Every entrepreneur has once dreamed of that heaven-sent angel investor. A rich individual who’s willing to provide the initial seed for their business plan. In reality, angel investors do exist, and all they ask for is a percentage in your company. They also often take a mentor role in your business, so should you find an angel investor, you’ll also receive valuable business advice. Consider looking through your local investment firms. Some of them actually have angel investors in their ranks.
The hunt for business capital is always a difficult one. But it’s one worth struggling towards as it will lead to achieving business dreams. Hopefully, you get to fund your business plan soon.