Welcome to 2016, entrepreneurs! January is always our favourite time of the year, because it’s the perfect time to make plans and goals. For many of us, that means finally turning that business idea into reality. It means focusing your time and effort on something you care deeply about. Starting a business is one of the best New Year’s resolutions out there. And there’s no reason you can’t create a successful venture over the next twelve months. It’s time to dust out that notebook, and start making plans!
Of course, plans and ideas are one thing. Finding the money to get your venture off the ground is quite another. Funding your startup is the single most difficult thing you’ll face in the first year of business. Funding is particularly tricky if you’ve got a poor credit history. It’s an unfortunate reality of the business world, but money rules! You’ve got to spend money to make money, and that requires an injection of funds. So, where exactly are you going to find the money? Today, we’ll run through some of the best options for giving your business the financial backing it needs.
For many entrepreneurs the only option is to smash the piggy bank, and break into the savings. It’s a scary thing for anyone to do, especially if you’ve spent a long time building it up. But, it’s often the only option. Remember, it’s up to you to prove that you believe in your business idea. Putting your own money into the pot is a sure sign that you believe there’s a future here. It will also hold you to account, and push you to work hard on it. Further down the line, investors are looking for entrepreneurs that are willing to invest in themselves.
Friends and family
Sometimes, your personal savings won’t cover all the startup costs. They quickly rack up when you start the ball rolling. Everything from stock to legal fees to website-building adds up fast. Sometimes, it’s worth approaching your friends and family for help. They can often lend you money, without the imminent pressure of a bank loan or repayments. Be sure to pitch the business as you would an investor, and explain how and when they’ll get the money back.
Banks and creditors are specifically set up to help support new businesses. These institutions offer business startup loans to help you get on your feet. Of course, you can’t just walk in and ask for a loan! You’ll need to prove that you have a viable business idea. A strong business plan is essential, and a timeline for revenue will be essential.
Crowdfunding is a relatively new and innovative way to fund a startup venture. In essence, you’ll ask the community to pitch in and bankroll the company. As an entrepreneur, you’ll set a target amount, and explain why the money is needed. It’s your job to convince people to pitch in and fund the company. If the target is reached, the money is yours, and the venture can move forward.
There is, of course, another option here. It involves pitching your business to investors, and asking for funding. Whilst this is an option for newbie entrepreneurs, we don’t always recommend pitching too early. An angel investor will grant you the money in exchange for a percentage of the business. You could end up giving away a big portion of the company for just a small cash injection. If possible, you want to build up the revenue and reputation before pitching investors. Having said that, their money and expertise could be invaluable to you.
Start from scratch
This option is perhaps one you didn’t want to hear. But, for some companies, there’s no alternative than starting right at the very bottom of the ladder. With no financial input, you can start a website, and gather some early interest. Think about the likes of Facebook that started in a dorm room with no money whatsoever. Think of a consultancy that requires no funding. Can you make your business idea work without initial funding? Take one step back to go two steps forward!
We advise entrepreneurs to find a business partner for all sorts of reasons. First of all, it always helps to bounce ideas around, and get a trusted second opinion. It also helps to have someone who keeps your spirits up, and keep you motivated. But, it also helps to find someone who will share the initial funding burden. By splitting the startup cost, it makes your venture much more viable.
Make 2016 the year you get your business off the ground, and use these funding tips to get there!