When launching your new business, you’re likely to come across a number of obstacles before hitting the sweet spot, One of the most fundamental stumbling blocks for entrepreneurs is fund. Even if you don’t have costs like sourcing of products and parts, you’ll still need some ready cash available for sundries like software, office supplies and marketing materials. If you don’t have the cash available yourself to invest in your business, there are a number of ways in which you can get hold of vital funding.
Here are the top 6 ways to fund your business:
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1. Take it to the bank
The first – and most old school way of acquiring fund is to approach a bank for a business loan. In order to do this, you need a double headed plan – you’ll need to put together a killer business plan which will convince the bank’s business manager that your idea is likely to succeed. When choosing this route, it’s important to keep in mind the fact that you will be charged interest on the loan – and that there will be serious consequences if you default on repayments.
2. Howdy partner
Getting yourself a business partner can be a great way of getting hold of the fund that you need as well as support and networking opportunities. There are a few options when looking for a business partner. The first option is to find a ‘silent partner’ – somebody who is willing to provide you with funding in exchange for a cut of your future products – but won’t be directly involved with your business. The second kind of partner is one who will provide initial funding and, will also want to be involved on a day to day basis. Another option is to partner up with a business parallel to yours – for example, if you’re launching a design company, you might consider partnering with a printing company. This way, you’ll receive funding as well as forging a long term partnership with another business.
3. Get crowded
Crowdfunding is a relatively new – but often effective – way of funding your business. To begin a crowdfund, you’ll need to put together a convincing pitch in order to get people to invest in your business. You’ll also want to offer an incentive such as a free product or discount. When done right, crowdfunding on a site such as Kickstarter can be a brilliant way of getting hold of the cash that you need – and fast. Although this can be really effective, you’ll have to be prepared to put in the work in terms of marketing your campaign for it to have a chance of succeeding.
4. Cloud Funding
Not to be confused with crowdfunding, cloud funding is the act of pitching your business idea to investors via the internet so that they can invest in your business. Essentially, you’re searching the web for somebody to fund your business – and that somebody could be an individual, a business or a group of people with an interest in your business. As with any kind of business transaction, you need to make sure that the terms are clearly set out and agreed before going ahead with the funding.
5. On the side of the angels
An Angel Investor is somebody with a significant amount of available cash and an interest in investment in new businesses. The investor will inject cash into your business in exchange for convertible debt or ownership equity in the company. Finding an angel investor can be a lengthy business and, your best bit is to begin by conducting an internet search for angel investors which a specific interest in your industry. As with a bank loan, you’ll usually have to provide a comprehensive business plan with accurate forecasts which will show the investor that you’re worth taking seriously.
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6. SBA Loans
Entrepreneurs looking for financial leg up can apply to the Small Business Administration for a loan. Although this can be a quick way to get hold of the folding, SBA loans will generally require a guarantee of loan repayment and, often a guarantor, so you need to think carefully before taking on this kind of debt unless you’re 100% sure that you will be able to make the repayments.
If your business idea is strong enough, the above are really effective in getting it off the ground – just make sure that you have everything in writing and, that you don’t take on more than you can afford.