Getting a startup from the idea phase to the running stage takes a significant amount of work and proper funding to meet goals. Finding this funding will take up a large portion of the planning time for any new business.
Having the capital to meet demands, create the necessary ads, and hire employees, is pivotal to the success of any startup. Finding this funding does not have to be difficult though if you know where to look. Here are five popular startup funding options to help the planning process run a bit smoother.
Personal or Business Loans
One common and popular option for funding a startup business is that of loans. Loans come in many forms and can offer the capital needed to start and maintain a new company until sales and profits can cover the daily expenses.
Aside from knowing how to get a business loan, you must identify which type of loan suits your business the most. Some of the different options for loans include small business bank loans, car title or collateral loans, and loans from friends and family. Bank loans will generally offer higher funding amounts but with stricter requirements. Car title and collateral loans will provide funding up to the value of the collateral used. This can sometimes be an easier option than bank loans with their stricter standards.
Borrowing from friends and family may not offer the amount of funding needed for long term goals but will allow borrowers to avoid the stringent qualifications required for some other options.
Another popular funding option for startups is choosing to work with investors. With this funding method, investors who have an established standing or enough capital will provide the funds needed to start a business in exchange for a portion of the shares of the company as it grows.
Investors are an excellent option for startups that have the possibility of growing into larger companies where sharing the profits won’t be as noticeable as smaller companies. However, you need to have a solid business plan to attract investors to your startup!
Crowdfunding and Sponsors
Crowdfunding is growing in popularity for startup funding options. Depending on the service chosen, this option provides a way to raise funds for capital that does not have to be paid back. Utilizing platforms like Kickstarter, Patreon, Indiegogo, and more allows interested parties to make donations to the company without giving them a claim to future earnings. There is an abundance of platforms for crowdfunding options, so you will need to put in some work to find the best crowdfunding choices for your specific needs.
Family and Friend Support
Family and friends often offer support in the form of encouragement. Leaning on this backing may also provide a means of raising the extra funds needed during startup. As with crowdfunding, family and friends can choose to make donations to your endeavors.
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Offering incentives like free products or services in exchange for these donations often provides an adequate exchange.
Consider a Partner
One final option to consider for startup funding is a partnership. Partners can provide more than just financial backing for new businesses. New people added to the company will offer fresh ideas that you might not have thought about in your product or service ideas. Partners also bring possibilities for new connections, especially if choosing to partner with larger companies who already have an established name of their own.
Finding the funding needed for any startup can be a stressful venture, but it doesn’t have to be. With a bit of outside searching, help is available and can provide many advantages other than just the monetary ones.