Idea’s, motivation, and a large helping of discipline are not the only ingredients needed to launch a business. To make the most of any business opportunity, you will need to find a way to finance your venture. For many people, this can be a major problem.
Whether you’re looking to start a new small business or grow an existing company to the next level, money is needed. For anyone lucky enough to have large personal savings or an angel investor, this can be quickly solved. For everyone else, there are several paths which can turn a dream into a reality. Below we look at four ways you could find the funds needed to give your business a boost.
- Earn the Money
Many business plans will require quick action to make the most of a passing opportunity. For all other ventures, a different approach can be taken. If you have a long-term plan and wish to move your life in a new direction, much planning will be required. With time, you can look to earn extra money through a second job to at least cover some of your future costs. Not only will this provide you a risk-free source of money, it will also show your initiative and could provide vital experience for what lies ahead.
- Friends and Family
Using your own money can be a huge risk, however, using friends can be riskier still. Many close relationships have been broken because of money problems despite both sides having the best of intentions.
For this reason, you must treat any such deal as professionally as possible. A formal contract should be made with both parties taking independent legal advice. Clarity is key to any potential loan being successful. Therefore, a firm and thoroughly understood arrangement should be in place before any money is exchanged.
- Small Loans
The American lending market has gone through many changes in recent years but loans are still a viable option. While banks were once the main source of loans, there are now alternative lenders available. This includes lenders who can provide funds despite poor credit ratings which would typically see an application refused. Although many of these loans are made on a short-term basis, there are many benefits which can be taken as explained further here. Many of these loans don’t require the in-depth business plans demanded by traditional bank loans. However, it’s important to complete this paperwork regardless to provide clear goals for your business.
There are now many platforms which can be used to source crowdfunded money. Depending upon the nature of your business, some will be more suited to your needs than others. Crowdfunding often means you will need to offer something in return to potential investors. This could take the form of either products or services from the business, cash returns with interest or equity. While some donations ask for nothing back in return, these are incredibly rare to win. As such, you should always expect to provide something in return for help and treat anything free as a bonus.