Financing business startups is the toughest part for an entrepreneur. At the very least, it requires a little or enough amount of money to start. You might not ready to have funds right away when you plan to launch. However, a lack of fund doesn’t mean you put on hold your entrepreneurial dream. Right in this article, you’ll find different ways to fund a business startup.
Before we get started, allow me to give you a little advice to use personal savings for business startups. Never go directly to a bank to make loans without any proof of your capacity to repay. This is unacceptable but, banks usually do not lend to business that doesn’t have operating histories. The timely loans repayment is the bank’s main concern. After all, business is still business. In addition, you might get a loan from a bank with collateral. You only get higher amount when you have secured assets to use as collateral: car, home, gadgets, and other property. Even choosing different financial sources, the amount can be approved for loan depends on the size of the business and collateral. Sounds difficult? Don’t fret! Here are other ways of generating business capital if you can’t think of any.
1. Start with selling your product or get others know your product or service. In this stage, forget first the office or shop since a zero capital doesn’t allow you to put up. Launch a website informing the community or your networks about the product or service you offer, start a marketing strategy online, and start building relationships.
2. Borrow from family or friends. In all walks of your life, I guess you have at least few friends you can call and ask a help with, right? Introduce your business plan to your family and friends. Who knows, they might be interested to join your business. This is another way of funding the business if they have some spare cash to contribute. In addition, borrowing from family or friends has a little or no interest to repay the amount, and you can avoid hassles from bank contracts too.
3. Do sideline business. If you have valuable knowledge and skills to other things, you can make those an asset. Let’s say you have a skill in hosting an event or similar to that, make use of your special skills to save up money.
4. Have your business plan always ready for ventures. This should come first, above all. You can’t come up the figure you needed unless your business plan is done. In the financial plan, it should appear your ways of getting money for the startup, includes your method of repayments (if acquired from lending). The most exciting part is showing the detailed method if how the business can profit and how much it will earn in the next few months. A good business plan attracts investors. Therefore, rather than lending from a bank, ventures with investors is the best option.
5. Home loan. If you have a remaining balance for your home, you may apply for a home equity loan. You can use the money to start your business. However, this method can put your home as collateral, and you risk foreclosure if failed to pay.
6. Putting risks to sell assets. Do you have luxury gadgets or things you can sell? Open your closets and you might realize that you can get more money from them. If you have a car, you can risk selling it, choosing to commute is not a bad idea after all.
7. Using business credit cards. This is the easiest and quickest way to start your business as it’s always available. You can rely to your credit card for your business cost. On top of that, the minimum payment is quite low. If you are frugal with your other expenses, then you can use your credit card for your business and pay the minimum amount. In addition, you can move credit card balances to another credit card that you can use for your startup capital. However, any trouble in making payments increases the interest rates and costs on cards.
8. Home or apartment renting. If there’s a space in your house or apartment, use the opportunity to rent it out. The money raised from renting out can be used to fund business startups.
9. Fundraising or crowdfunding. This can be done over the internet. The crowdfunding platform allows raising money from the large number of people or organization in exchange of product, investment, service, project, and cause. This gives you lot of advantages as you can raise money without sacrificing your business equity. This is also a better option compared to forcing companies to pool for a dime investment.
10. Investments. If you can’t get money today, you can plan ahead for future time. Let’s say you want to study more of the business you’ll put up, if you need more time, then set a future time. For example, 5 years from now, you’ll open your own restaurant or you’ll engage to franchise a restaurant. Plan the amount needed for the business, and while you’re waiting for the right time, invests in other companies. Use the dividends and proceeds for starting a business.