When it comes to funding a business, there are two distinct aspects: the reality and the fantasy. Many people are adept at planning the fantasy part of the process – what the business will look like in five years, the things they can buy once it’s a success, et cetera – but the reality part eludes even the most dedicated entrepreneurs.
Being able to adequately plan for reality is what separates the successful entrepreneur from the also-ran. One of the most important aspects of planning your business’s reality is funding. Put simply: how are you going to get money for your business? Do you have enough personal funds to dip into, or will you need to seek outside funding?
These are questions you’ll need to ask yourself before you embark on your business venture, whatever it might be. Never fear – we’re here to help. Here are 5 ways you can look into funding your business.
This one might be slightly risky if you’re not 100% confident in your business venture, but then if you’re not 100% confident, you probably shouldn’t start your business anyway.
Allocating some of your personal funds to get your business off the ground – or to inject some much-needed c
If you don’t quite have the cash yourself, you could try a reputable and well-liked company like Loans 2 Go for a quick personal loan. Putting some of your own cash into a business can be risky, especially if it’s a long-term problem you’re trying to address, but in the short-term it’s a great way to keep things going long enough for your business plan to straighten out.
Friends and family
If you really, really believe in your business idea but you’re just not quite there with the money, then you could ask your friends and family to help you out.
Obviously, there are risks involved here – you’re taking a risk on the financial future of your nearest and dearest, and depending on how close they are they’ll probably want a return – but if you’re close with your immediate family then this is a surefire way to drum up cash.
You don’t need to ask them for a lot; by asking many family members for a small amount, you’re spreading the cost across people and not making anyone feel like they’re shelling out. When your business is the success it will inevitably become, you can pay them back in kind.
With the advent of crowdfunding platforms like Kickstarter and Indiegogo, unusual and innovative ideas are hot property indeed.
Everything from video games to movies to business ideas is being funded by crowdsourcing these days, so why not give this a try with your business as well? If you think you’ve got something that people will really value, then asking them to help you get it started seems like a logical way forward.
If you want to take this route then you’ll need to be sure your business has real customer value and isn’t just a self-contained venture, because the people who fund the business are the people who will eventually take advantage of its product.
If you’re not familiar with the concept of an angel investor, here’s a quick rundown. An angel investor is basically someone with some degree of wealth who pledges some of that wealth to your business in return for something like ownership equity or convertible debt. Attracting angel investors isn’t easy.
There are a number of things you should be sure of before you pursue this avenue of funding. Angel investors like to see a business venture that has very little chance of failure, so adding people to your team with experience, demonstrating that you know your chosen area, and consistently having results to show them in return for their funding are all great ways to instill confidence in your investor.
Credit cards probably shouldn’t be your first port of call when it comes to funding your business. There are quite a lot of risks involved in funding a business on credit, many of which could come back to haunt you in the future should your venture encounter a rocky patch or collapse entirely.
If you fail to keep up your payments, you’ll be compounding your problems considerably, and it’s no good simply maintaining the status quo by paying a small amount each month because the bad and the good will simply weigh each other out. If, however, you think you can make the payments using some of your business’ profits, then a credit card can be a great way to drum up a little cash and get things going. Just don’t make the decision lightly.
We hope our 5 quick tips to help you fund your business have been useful. We wish you all the best of luck in getting your idea off the ground – let us know if any of these tips have been helpful for you, or if there’s anything we missed!