Whether you’re trying to start a new company or grow a small business, there are a number of options for getting the necessary funding.
You don’t have to go into debt to fund your venture.
Determine how much funding you need
Before you start securing funding for your business, you need to determine how much money you need.
How much will it cost to get your product or service up and running? How much will you need to cover operating costs during the first year of business?
You may not need as much as you think if you make a simple plan for managing your cash flow.
Once you know how much funding you’ll need, you can then brainstorm ways to secure it.
To help you get started, we’re sharing several funding ideas for new business ventures today.
#1 Ask friends and family for funding
Friends and family can be a great way to get some initial funding for your business.
Just make sure you don’t forget the line about it being an early-stage investment!
Additionally, it may be a good idea to create a contract for this initial investment, detailing the dollar amount invested and specific terms.
If the funding is a gift only, create a written agreement with your loved one to avoid potential future problems.
#2 Create a Kickstarter campaign
Launching a Kickstarter campaign is an excellent option if you’re looking to raise more than $100,000.
You’ll need to give potential investors lots of information, including product renderings and specific milestones.
Just make sure you set realistic expectations for what the campaign will accomplish!
Tips for running a successful Kickstarter campaign include:
- Offer clear rewards at different funding levels
- Present a short video about the business
- Be transparent with information about your business
#3 Offer equity in your company to investors
An initial public offering (IPO) isn’t usually an option for companies just starting. However, if you’re looking to raise a lot of money, you might consider offering equity in your company instead.
In this scenario, you’ll likely give up a portion of ownership in the company.
That said, with high potential returns for investors also come higher risk!
Additionally, make sure to consult an attorney about what type of contract should be used when selling equity in a company.
#4 Find an angel investor
An angel investor is usually someone with a lot of money who invests it in small, early-stage companies that have the potential to turn into something big.
Contacting someone like this can be challenging, but you have to start somewhere!
Start by finding an intermediary, such as a venture capitalist or business broker, that is likely to access angel investors.
Things to remember when considering angel investors include:
- Investors are attracted to companies that have the potential for high returns
- Be prepared to give up some equity in your company
- Angel investors usually invest smaller amounts than venture capitalists (e.g., $100,000 or less)
#5 Use the Small Business Administration’s loan program
If you’re looking for a small business loan, consider using the Small Business Administration (SBA) instead of applying through your bank.
In addition to providing you with loans from $5,000 up, the SBA also offers many resources for entrepreneurs.
#6 Apply for government grants or programs that match your needs
It might seem like a long shot, but numerous government programs are designed to help small business owners.
The Small Business Administration is one example of this type of program.
Additionally, there are state-run programs that might be able to help you out with funding!
#7 Consider self-employed loans
Self-employed loans can also provide an option for people without a strong credit history that needs money quickly.
Typically this type of loan doesn’t require a credit check or pay stubs.
However, you’ll need to give up a higher interest rate in return.
#8 Get early contributions from your customers
This strategy is similar to the Kickstarter campaign.
However, rather than asking complete strangers for money, you’re building up excitement and momentum by getting early contributions from your customers.
If you can get 10-20% of your funding this way, it will be a real morale boost!
If you’re selling physical products, you can consider allowing customers to preorder.
#9 Rely on contract labor or freelancing work to lower expenses
If you have a specific product or service, you might be able to outsource some of the work.
For example, paying an independent graphic designer could be much less costly than hiring someone in-house if you are in the design business.
Additionally, there are lots of online freelancing platforms that can match workers with employers.
There are plenty of options for getting funding for your new business. Be prepared to put in the work and be persistent!
If you’re rejected by one institution, don’t give up hope. There are other ways to get money for your business.
The best thing to do is start exploring your options today!