Many successful businessmen say that in order to become successful at running your own business; you need to be involved in what they call as the “game” from an early age. Entrepreneurship isn’t something one can excel at without trying different things and for that reason, many young entrepreneurs today are looking to engage in multiple business ventures that they think can earn them profit in the future. Even if they fail to do make their business profitable at first, the experience of it is unmatchable.
However, it is quite common these days that whenever a person thinks up an idea that he or she is passionate about and thinks that it can work and earn them a handsome profit, they’re hesitant to do because of the financial implications involved. Funding a new business in today’s economy can be a real tough task especially if you don’t have any prior business experience or a good business/personal credit which you might not have due to which the banks might be hesitant to give you loan. However, it is often the case that they don’t do enough research on the finance options available to them and opt out of starting their own business without a solid reason. So here are six amazing financing options for startup businesses.
Let’s get the most common and obvious way of financing your startup out the way first. Many people argue that lending money form the bank is still the easiest and the most convenient way to get your business funded. It also has many different advantages. For starters, banks don’t take up any equity in your business and won’t have a say whatsoever in how your business is run. However, it can be tricky securing a loan for your business from the bank because they require a certain prerequisites beforehand before lending you the money. These prerequisites include a healthy personal credit if you don’t have previous business experience and offering collateral to the bank. (If you have a bad credit or any other issue with the bank, click here)
Crowdfunding is one of the most convenient ways to raise funds for your business as it doesn’t require you to do much except to have a valid business idea and a plan that people can get behind. It involves people funding your business through donations of their preference online, and you’ll only have to setup an account on many platforms like GoFundMe, etc. It also has many advantages of its own. For example, it is a great way to get market validation depending on the amount of money you raise which can be a key factor if you are ever to consider expanding your business once it is up and running.
Venture capitals involve companies funding your startup if they find it credible and worth their investment. These companies fund your business completely, and the best thing about it is that they don’t expect repayments since it is not a loan so you won’t have to worry about that and you can focus solely on your project. However, they are not giving away free money obviously and expect you to hand over a huge chunk of equity from your company to them.
Before we get into any other ways, you can fund your new business, realizing that trying to finance it yourself is the best option available. Getting a business up and running isn’t a one-day job; it requires a lot of preparation. Part of that preparation is to save up the money yourself and to do that you’ll need an estimated amount required to start your business and then work towards it.
Another way to save up money on your own is to sell the items that you don’t need. If you take a look around, you’ll find many items that you don’t use on a daily basis or ever for that matter that are just lying there that can be worth a few hundred dollars. In this way, you’ll make sure that you’re keeping 100% equity of your company since you won’t have to sell shares to raise finance and you won’t be burdened down by loan repayments to the bank either.
Pledging your future earnings:
If you are confident that your business starts up will be profitable, convincing an investor won’t be a problem then. One way you can convince an investor to fund your business is to pledge a percentage of your future earnings to him/her.
There are several competitions held annually that offer the winner prize money enough to start their own business and competing for them isn’t a bad idea since it doesn’t require any of your own money.
David Simmons is a financial analyst and accounting expert. He has in-depth knowledge about setting up small businesses as well as creating profitable investments. He regularly contributes articles related to business and loans at https://www.ebroker.com.au/.