5 ways to fund your business or startup

An amazing business idea that’s not supported by adequate financing is destined to remain just that, an idea. There is no denying that money makes the business world go ‘round, and that you need to solidify your financial position quickly in the early days of your startup or small business if you are to have any chance of reaching long-term solvency.

It’s a dog-eat-dog business world out there, and if you are not reallocating your resources towards constant growth, innovation, and even expansion, then you are falling behind. That said, the majority of startups won’t even make it past their first year, let alone become stable enough to expand safely into new markets. To avoid the same fate, you should consider one or more of these essential funding options that will transform your business from an idea into a thriving, competitive brand.

Try your luck with crowdfunding

The modern crowdfunding market might be highly competitive and oversaturated, but that doesn’t mean that your story doesn’t stand the chance of capturing the interest of the public, and attracting people who are willing to support your cause. After all, you should never underestimate people’s ability to discern between a viable business idea and a concept that is destined to fail.

So if your brand-to-be has true merit and a sound business plan to back it up, you can try your luck on some of the popular crowdfunding platforms such as Kickstarter, Indiegogo, RocketHub, and more. You will need to complement your idea with a comprehensive growth plan and a viable financial strategy, and most importantly, you will need to stand for something truly meaningful, as the best way to attract supporters is to sell an idea that will leave a positive impact on the world.

Find affluent investors

The is no shortage of affluent people out there who are looking for up-and-coming businesses they can help get on their feet and solidify their position in the competitive market. However, this doesn’t mean that finding or closing angel investors is easy, otherwise everyone would be prospering using the same funding method. One of the main issues is that these people are difficult to win over, as they are constantly bombarded by other amazing business ideas, effectively reducing your chances.

The other major concern is that angel investors are looking to get something in return. This will usually be something along the lines of ownership equity in your company, typically assuming the position as one of the decision-makers on your board. You will need to decide whether or not you are willing to let another person, or a group of investors, dictate the course of your brand’s journey.

Debt financing as a safe option

Debt financing, or lending, has been one of the safest and most rewarding funding methods throughout history. These days, things are still very much the same and the lending environment has become even more favorable, as lenders are offering stable unsecured business loans to business leaders and aspiring entrepreneurs who are looking to get their companies off the ground quickly. Particularly, these types of loans are favorable for startups that require funding but can’t meet the strict requirements of traditional loans and lending institutions.

You can use a loan to finance your business in any capacity you require, ranging from the procurement of necessary office equipment, to cash flow stabilization, expansion, or even to meet the financial needs of product innovation that will diversify your offering and propel your brand forward as a whole. While you will have to pay an unsecured business loan back with interest, it might be a small price to pay in exchange for retaining full ownership of your company.

Venture capital

Venture capital is a unique form of financing that could quickly transform your business idea or an established company into a large operation. However, there is always a twist. Venture capital firms and groups deal in high capital investments, meaning that they will push substantial capital your way in order to skyrocket your business, but will demand a substantial share of ownership in return.

Typically, venture capitalists will demand majority ownership and assume decision-making power on your board of directors. This means that every major decision you make will need to be approved by the board, and that sometimes your decision might get overturned. Be careful when revising venture capital agreements in order to ascertain the true nature of the contract and how much of the company will actually remain in your hands.

Turn to friends and family

Financial aid can come from every direction, sometimes from sources you least expect to be willing to help you. While the age-old saying “don’t mix family and business” holds true to this very day, turning to your affluent family members or friends in time of need might be a move justified by necessity. And after all, you might just strike a favorable deal that will benefit everyone involved and thus make the entire process run smoothly.

The key to “landing” these types of investors is to treat your agreement like a real business transaction, which it in fact is. Have a sound business plan at the ready and make sure that your long-term financial plan is air-tight. Emphasize how they stand to benefit in the matter, and offer substantial compensation for their investment. Most importantly, make sure that your family members or friends understand the true risks involved in their investment.

In closing

Money is the lifeblood of business. If you want to turn your idea into a solvent company, you will need to obtain adequate financing early on, which can prove to be a challenging task. Use one or more of these options to safely finance your brand and pave the road to a prosperous future in your field.