Entrepreneurship is becoming far more accessible than it used to be in the past, which has driven many aspiring business people to bite the bullet and start their own company. While having a unique idea that can sell may seem like the most challenging part of your journey, funding your company can also be quite a nightmare.
Having the right connections that can land you enough investors to fund your idea is not an easy task when you’re young while coming up with the equity to cover the basics, such as having an office or a small staff to help you out, can also stand in your way. However, small businesses may have better luck in finding investors and funding methods. If you’re wondering how you can finance your startup, here are the most effective ways to do so.
The safest way to fund your own business is to save up beforehand. As soon as you have an idea for your business, you should start doing the math for all the expenses needed to cover your basic needs for a few months, before your business can hold its own in the market.
This can save you the risk of falling in an endless loop of debts, especially if you’re planning to pay back your loans from profit.
No matter how compelling your idea may be, you should always be prepared for the worst-case scenario; and in this case, it would only be trials and errors, rather than a pile of debt that you can’t payback.
Young entrepreneurs always run into the same obstacle of having a limited business social circle, which can make it very challenging for them to find an investor. Landing a meeting alone can be a difficult task, once the investor learns how young you may be, or that you’re new to the field. When starting small, professionals at eBroker suggest hiring a broker to do the work for you.
This can assure you that the broker will do the talking on your behalf. Instead of finding a lender yourself, these companies do the research for you and make the first approach. Investors are much more likely to agree to a meeting through a broker, seeing as loan-finding businesses have a reputation to preserve, and would not recommend a business idea to an investor unless it’s compelling.
If you’re not keen on looking for investors because you’d like to take the profit for yourself, business loans are always an option. There are micro-financing companies that can give your company the needed allowance to survive for a few months until you can pay back your debts through your profit.
Expect these companies to interview you, and to advise you on the needed strategies you’ll have to take to maximize your company’s potential. Some of these companies can give you a few thousand, while others will give you up to $10,000, which can cover most small businesses for a few months.
However, some of these lenders have requirements of being in business for no less than six months, so you may have to rely on your savings before you can get financed.
Your credit card limit can go a long way if you have a compelling score. You may need to talk to your bank about your business plan, or request a higher credit card limit to finance your business. Discussing this with your bank is a must, as they may also offer you different finance plans, depending on how long you’ve been in business. If you’re running a startup, you may have a range of credit card plans to choose from.
Friends and Family
When all else fails, asking for the help of friends and family can save your business. You don’t have to personally go up to them and ask them for loans, either. You can always set up funding plans online, and share them on your social media.
If you have a broad social circle, and not necessarily a professional one, you’d be surprised with the amount of financial help that you can get your hands on. If hundreds of individuals spare as little as five bucks, you’ll end up with thousands in a short period of time.
Being indebted to your investors can be a risky bargain, which is why you should consider talking to any potential partners or investors who show interest in your business idea. Saving up to cover your business’s basic needs is always the smartest choice, but when all else fails, you can hire an agent to find an investor for you. On the other hand, you can also ask your friends and family for help, while credit cards and bank loans can provide you with the cash you need.