This article is for informational purposes only and should not be construed as legal or financial advice.
You are building a startup and wonder how you should fund your business. This was an important question for Ascend when we were starting whether to take funding.
As such, it takes a lot of hard work, dedication, and, of course, money. Many people think that starting a business means having a lot of money saved up already. However, this isn’t always the case. There are strategies you can use to fund your startup business. This blog post will discuss eight of them!
1. Credit Cards
Your first option for funding your startup business is to use credit cards. This method can be very costly in the long run. So, it would be best if you only used it when you’re out of options. However, as explained at tier 1, business credit vendors can help you build your business credit score, which will make it easier to obtain a loan in the future. You should find a vendor that offers a 0% interest rate for the first 12 to 18 months and make sure you can afford to pay off the balance in full before the promotional period ends.
2. Crowdfunding
Another way to fund your startup business is through crowdfunding. Crowdfunding is when you collect money from many people, usually through the internet. There are many different crowdfunding platforms that you can use to raise funds for your business. Some of the most popular platforms include Kickstarter and Indiegogo.
When you crowdfund your business, you’ll need to create a campaign page on the platform where you are raising money. Your campaign page will include information about your business and why you need funding. In addition, you’ll need to set a fundraising goal and deadline for your campaign.
On crowdfunding, make sure you understand the terms and conditions of the crowdfunding platform you are using. Also, be aware that not everyone who pledges money will donate. So make sure you have a plan for using the money if you don’t reach your fundraising goal.
3. Personal Loan
Getting a personal loan is also a way to fund your startup. You can usually get a personal loan from a bank or credit union. The interest rates on personal loans are typically lower than the rates on credit cards, and you can usually borrow more money with a personal loan than with a credit card.
Another fantastic thing about using a personal loan to finance your startup is that the process is relatively simple. You need to provide your details and your business, and you may be able to get the money borrowed in as little as 24 hours.
Your debit card may also offer some money to help with the startup. Some debit cards can help you get a small loan or line of credit against your debit card. This can be an easy and sure way to start your business without taking out another loan.
4. Angel Investors
You may also want to consider angel investors. Angel investors are typically wealthy individuals who invest in businesses in exchange for a piece of the company. They can provide your startup with much-needed money and advice and can be a great resource to have on your side.
To find angel investors, start by researching online or networking with people you know. Several websites list angel investors and their investment criteria. Once you’ve found a few potential investors, reach out to them and pitch your business idea. At the same time, be prepared to answer inquiries about your business plan, financial projections, and team members.
If an angel investor is interested in investing in your startup, they will typically require that you sign a term sheet. This document outlines the terms of the investment. Moreover, this can include the amount of money being invested and how it will be repaid. Remember to tag along with your lawyer to review the term sheet before signing it.
5. Government Grants And Loans
Government funding is an excellent option for startup businesses. There are many different government grants and loans available, and each one has its own set of requirements. It’s essential to research to find the right grant or loan for your business.
The Small Business Administration (SBA) is an excellent place to look for government funding options. The SBA offers several loans, including the popular 504 Loan Program and the Microloan Program. The SBA also provides grants for small businesses, including the Women-Owned Small Business Grant Program and the Veteran Entrepreneur Grant Program.
6. Partnership
Getting a partner can be a great way to get your business funded. A partner can provide money, resources, and knowledge to help you get your business off the ground. When searching for the right partner, make sure you find someone who shares your vision and is willing to make your business successful.
7. Families And Friends
You can consider your family and friends when looking for startup funding. They know you best and are likely to believe in your business idea.
Start by creating a pitch deck or outline of your business, and then share it with family members and friends. You can ask them if they would wish to invest in your industry.
If you have a strong relationship with your family and friends, they may be willing to invest even without seeing a detailed plan. However, it would be best to have all the facts ready before asking for money.
Make sure you set realistic expectations about how much money you’re hoping to raise from this group of investors. Families and friends are often more willing to invest smaller sums of money than professional investors.
8. Self-Funding
If you’ve got some cash in your savings, you might be able to self-fund your startup. This can be a great idea if you’re still hesitant in looking for outside investors. There are a few things to keep in mind if you decide to go this route:
First, make sure you have enough money saved up to cover your costs for at least 12-18 months. This will give you time to get your business off the ground and generate revenue.
Second, don’t forget that you’ll still need to pay yourself a salary while you’re self-funding. Make sure your expenses don’t exceed your income.
The good news is that self-funding gives you a lot of control over your business. For example, you can start working from home while accumulating the cash needed to get a physical office. Furthermore, you’re not beholden to anyone else, and you can make decisions without getting approval from others.
Final Words
Business funding can come from various sources, and each has its benefits and drawbacks. The most important thing is researching and finding the option that best suits your business. Using the ideas listed above can give your startup the boost it needs to succeed.
