The thing about starting and running a business whether big or small is that, more often than not, you will need to look for finance to help you turn your ideas into reality. Here are some funding options you can consider…
1. Family and Friends
Classic and a bit cliche; however, I recommend tapping these sources first as they might be more willing to listen to and invest in your ideas and ventures. We are not suggesting you to borrow from them because you can take repaying lightly but you could request for a lower rate of interest.
2. Venture Capitalists
Looking towards venture capitalists or venture capital firms is an option worth considering if your small business is a high risk venture. Venture capital is ideal for high risk ventures as they are ready to stick with you until you become profitable. In return you offer them a stake in the company.
3. Angel Investors
Angel investors are the new age “Fairy Godmothers” for businesses looking for finance. They play the role that an angel does by guiding you through the hurdles of enterprise creation and building. Most angel investors not only provide finance but also actively participate in the business and double up as human resource or marketing consultants.
4. Entrepreneurship Networks and Startup Accelerators
Most countries (especially since the recession) have turned their attention towards nurturing entrepreneurship. Local or national networks that work to finance and support entrepreneurs might be a good source to tap. If your startup is a mobile/Internet startup, then startup accelerators might be a great way to get your idea launched.
5. Government and Semi-Government Institutions
In a bid to promote small enterprises and businesses governments have various schemes on offer whereby entrepreneurs can acquire soft loans or low interest finance.
Alternatively, you can consider grants; they are non-repayable funds that are typically available for non-profits, but there are business grants that cater for-profit organisation. If you are able to secure grants for your business you may want to consider software from a company like Workday in order to efficiently manage your finances.
While some amount of paper work and follow up may be required those are good schemes to sign up for.
Most banks lend to small businesses and have special schemes for certain enterprises. They also have training programs and give assistance to small businesses in business plan preparation and marketing.
7. Online Crowdfunding Platforms
Online platforms like Kickstarter or GoFundMe are a great place for you to float an idea and get people to join you in making that a reality. The great thing about platforms like Kickstarter is that your project attracts the attention of like-minded people and you are able to get people interested in your idea while attracting the necessary funding.
Business plan competitions run by colleges and universities are the place to look for finance. The best thing is that the prize money is interest free and will help you kick start your venture without worrying about repaying it.
9. Your home
How about getting your home to work as collateral to a loan? A home equity loan can get you adequate – often more than enough – to start your business. Alternatively, home equity line of credit is probably a better option if you don’t need a lump sum of cash up front; instead of having the entire sum of money in advance, you will get a line of credit – just like credit cards.
10. Your belongings (Garage sales!)
Seriously, this is probably the best business funding option you should consider. I’m sure you have unused items in your home or apartment. Why don’t you have a garage sale or list yours on sites like Craiglist? While this option won’t give you a million dollar to start with, at least you can get a good amount of cash to get the ball rolling (while having your home less cluttered!)
Bonus idea: Social Enterprise Financing Networks
These networks invest only in social enterprises or those firms that are engaged in commercial activities that have social impact. They also enable small investors to become a part of the big social change by investing in small businesses with that social edge.
There are more sources that you can tap for your small business finance needs: Cash loans, credit cards, and so on – but you need to take extra care when you decide to take any of them, as they are unsecured (read: Higher rates of interest.)
While this article will help you learn more about where you can look for small business financing it might be worth noting that any funding you get is a liability you are going to have to repay at some stage. So ideally don’t raise funds unless you need them. However, if you are sure that you need to take loans to fund your business growth, then be sure you have done proper calculations.
So, how about you? What is your method in funding your business? Please share yours by leaving a comment on this post.