With hundreds of thousands of businesses opening each year, you have a boatload of competition to consider. Sure, there are hundreds of business ideas that may not need a huge initial investment, but the fact of the matter is, most of the time you need money to make more money! So, you’ll need to know the ways to fund your startup business.
Even if you are short on money to start, it shouldn’t stop you from achieving your dreams. Instead, you need to focus on raising capital to meet business startup costs as well as the investment required to grow your business to the next level!
Not knowing the ways to fund your startup business can set you back and keep your business from starting altogether. Continue reading this article to know how to raise money for your business and learn some fundraising ideas.
12 Simple Ways to Fund Your Startup Business
1. SBA (Small Business Administration)
As you’re looking at business funding, you’ll find there are different types, but some are more difficult to get than others. When you work with the SBA, it can be easier to get a loan since the government has a vested interest in the well being of businesses.
The SBA has multiple options to cater to the needs of different types of businesses. But most importantly, they help and guide you through the process of finding the right loan, which is why applying for the SBA funding should be your top priority.
If you aren’t likely to qualify for a traditional loan, then microloans might be the best option for you. Microloans are put together for businesses and individuals that need some extra help, but can’t qualify at a bank.
Microloans are popular in small and developing countries, but this still can be an option for you in the U.S.
3. Personal Financing
Do you have good credit and believe in your idea? Depending on how good your credit is and if you have collateral to put up against the loan, you may be able to get a personal financing.
You may also have chances of funding your business without an impressive credit score, but if you do decide to take out a personal loan, you should know that this is a risky situation. That risk factor is why many would-be business owners aren’t able to get a loan.
4. Savings Account
If you have a savings account, and there is no other way to get the money you need to fund your business, it might be time to tap into your savings account. Spending your savings means you won’t have a safety net if things go wrong, but if you see the vision, you might choose to invest in your own business.
Crowdfunding is becoming a common way to raise money for a new business. One of the most popular crowdfunding sites you’ve probably heard of is Kickstarter. Companies have raised millions of dollars through Kickstarter campaigns, and more companies continue to use this platform.
If Kickstarter isn’t the right option for you, there are other sites that can help depending on your needs. Some of these sites cater to one type of business, such as non-profits, while other sites cater to small businesses.
6. Vendor Financing
Negotiating terms with your vendor may give you more time to hold onto your cash until you start turning a profit. Most vendors give you 30 days to pay your invoice before charging fees, but if you talk to them, you may be able to get a longer-term.
If you have a sales cycle that is longer than 30 days, it can be difficult to pay your vendors in that time period. Explaining your sales cycle to your vendors may help you drive your case home and get the help you need.
7. Loans from Family and Friends
Family and friends believe in us and our ideas more than strangers in many cases. If they believe in the idea as much as you do, you may find they are more than happy to open their checkbooks.
If you aren’t sure about taking money from friends and family, the best thing to do is to write out clear contracts, so everyone knows what is going to happen.
8. Pre-sales of Products
Did you know that you can sell your products before you even make them? Pre-selling products is a great way to see how many people want your product and to get the money you need to make them. Pre-sales of products is one of the great ways to fund your startup business.
Manufacturing products can be pricey, but if you have the money from purchases before you have to make the product, it will take the stress off your wallet. Not only will pre-sales help you get some cash up front, but it keeps you from paying for warehouses you would need to store all the products you made but didn’t sell yet.
You can pre-sell products online or talk to people person to person to let them know about your venture. People are excited to be the first to have a product, and you can offer special additions for the early purchasers.
9. Venture Capitalists
Venture capitalists or VCs want to invest their money in young companies that have a potential for growth. When you work with a VC, they usually want to have a share of the equity in exchange for their investment capital.
VCs not only help with the money part of things, but they often help run the business to protect their investment. The bigger the stake they have in the business, the more involved they usually have in the company. Make sure to choose VCs you’ll actually want to work with, or it could devolve into a nightmare situation.
10. Startup Contests
I’m sure you’ve heard of a little show called Shark Tank. Now, we’re not saying that you should up and apply to be on that show specifically. But, it’s important to note that that show and its concept have inspired thousands of similar ventures nationwide and online.
Something you can do to secure funding for your startup is finding either a local, city-wide, or online competition where you can pitch your idea in exchange for some cash. Even if you don’t win, there’s no harm in trying, and it’s a great way to get your name out there!
11. Find a Startup Accelerator/Incubator
There are many hubs across America that serve as resources for startups. After all, who doesn’t like promoting the free market and helping small businesses rise? If you apply and are accepted into one of these startup accelerators, you could potentially offload many of your costs.
A lot of the time, you can find these “incubators” near college campuses with thriving business programs. Once you’re in, you could gain access to their facilities. Gain a workspace, mentoring services, and networking opportunities with a startup accelerator.
12. Offload Costs – Service Trading
So, maybe you haven’t found a viable option yet on this list. A good funding possibility that might be already available to you is service trading. This won’t take the form of direct funding, i.e. cash, but it can cover the cost of certain services indirectly.
Maybe you have a startup that offers services for everyday people. Do you know a web designer who does freelance work? Maybe you met a product designer at a networking event a couple of months ago that you’ve been meaning to call. Contact these people, and offer them your services for free in exchange for theirs. Make it a fair deal, whatever that means to you both, and you could save thousands of dollars on setup.
It always helps to know the right people, and especially so if you have a great product.
Raising Capital for Business in a Nutshell
Surely now you know more about all the ways to fund your startup business, and you can get started with confidence. When you know how to get the money you need for your business, you can start to grow your business better!
I hope this list of startup funding ideas helped you gain a better understanding of how to go about raising capital for a business. Let us know in the comments if you have any questions about our list, and we’ll be sure to get back to you as soon as possible. Thanks for reading!