Financing can be challenging in any economic climate.
Whether you are looking for startup funds, capital to expand, or money to hold on to through the tough times, securing funds is tougher than ever.
In this article, I’ll state some simple ways to secure your business financing for a startup.
1. Invest in Yourself
This is an essential step to getting started. If you are starting a business, be prepared to invest yourself physically, emotionally and financially. Remember, you can only invest what you can afford to lose. Investigate your own financial standing so you know exactly what you are dealing with.
2. Backup for New Business
Know who you can turn to when you are in trouble or in need for help. There’s always a chance that borrowing money from friends or family could strain your relationships and prevent your business from facing a huge loss.
3. Have a Well Thought Out Business Plan
Take yourself and your business seriously, that’s when investors will take you seriously too. Do your research and gain as much information as you can about the kind of business you are wanting to start. Having a well thought-out and thorough business plan is a great way to convince the lender that funding your startup is a smart investment. Create the kind of plan that investors can’t ignore. Put in a good amount of time and effort in your project that will make lenders reach for their checkbooks.
4. Know Which Lenders are Right for You
Research on which type of lender is the best fit for your business’s loan needs. Such as if you are looking for traditional loans then the best lenders would be commercial banks. If your business is the type that fits economic development in geographic areas, you would want region-specific lenders. Before seeking a loan, borrowers should compile their accounts correctly.
5. Get Feedback
Let people interact with your product or service and see what their take is on it. A fresh set of customer experiences can give you an idea on any problem that you must’ve missed out on. These people will become your first brand advocates if they like your product.
6. Request a Small Business Grant
There are different types of small business grants that you can as your free money for. There’s federal small-business grants, in which government agencies can lend you grants if your enterprise is from environmental conservation to child care services. Also corporate small business grants that provide grants only to nonprofits servicing specific industries, some give to for-profit companies.
7. Start a Crowd-Funding Campaign
You can start an effective crowd-funding campaign online by letting your potential funders know how your product or business idea can benefit them. Share who you are, what you’re planning to do, where the project idea came from, what your budget is and why you’re passionate about it. You can also offer great rewards and set a funding goal. This will also help your business get great attention and will fund for your business idea. It’s no secret that crowdfunding campaigns can be a lot of work. But with the right structure in place, you can meet and even exceed your funding goals. Crowdfunding efforts can produce multiple investors and can surpass the amount that you require when done correctly.
8. Join a Startup Incubator or Accelerator
These companies are designed to help new or startup businesses get to the next level. Most also provide free resources including office facilities and consulting.
9. Develop Your Product or Service
If you need to mass-produce an item, you will have to team up with a manufacturer. Look for engineers and technical people who can help you develop your app or site. Rates can vary for engineers depending on their specialties, so make sure you’re not paying an overqualified engineer when you could get the same end result for a much lower price.
10. Build Your Team
Set your goals and mission clearly and follow hiring protocols. During the hiring process, ask the right questions that would help you easily define the kind of person you are about to hire. Establish a strong company culture which involves respecting and empowering employees through multiple channels including training and membership.
11. Focus on Getting Sales
Start listening to your customers and ask for commitments. Start with a simple process map to help you organize and define what is good for your business. Your sales plan includes customer acquisition cost, sales cycle, your sources leads and messaging strategy.
12. Try Personal Savings and Home Equity
Business owners should invest their own equity first before taking on debt or seeking investments. Savings should always be considered first because there is no required repayment and you won’t have to share your profits either. Home equity lines can also be good sources of inexpensive capital and are the next personal source.
13. Beware of Tactical and Structural Errors
Before seeking a loan, borrowers should compile their accounts correctly. Investing to expand quickly can have a negative cash flow, which is a tactical error when seeking fundraising. A company’s structure also informs equity.
14. Include Financial Projections
Include a financial projections section in your business plan. It will allow stakeholders to get a big picture of where the company intends to go over the coming years. Financial projections also must show a rational business strategy. You will need a financial advisor to create a financial projection in terms of profits, earnings and growth to any potential funding source.
15. Promote Your Campaign
Use different and the most active social media platforms to promote your market campaign. Reach out to the media and bloggers to get coverage for your campaign. You can also host a live event to drive up interest and engagement.
16. Innovate Value
The challenge to entrepreneurs is to innovate with the needs of the customer. Whether you are solving a problem or improving an existing solution most entrepreneurial epiphanies are value driven. Engaging first in the value you create for your customer develops your solution far more organically and efficiently.
17. Factor Your Business
Factoring is the cash management tool of choice for many companies. The factor (the funding source) buys the right to collect on that invoice by agreeing to pay you the invoice’s face value less a discount typically 2 to 6 percent. Factors also provide services that banks don’t. They typically take over a specific portion of the accounting work for their clients, help with credit and generate financial reports to let you know where you stand.
18. Product Pre-Sales
Product pre-sales can be an effective method to finance your business, since it doesn’t require you to take out a loan or pay back any debt. Just like crowdfunding, it can validate your business idea.
19. Angel Investors
Angel investors are those that will lend you money without wanting anything to do with your business. They put their money behind your idea and promise to provide a return on investment (ROI) in a specific amount of time. You should be putting funds aside each month toward repayment of any angel-invested money to protect your ability to repay as agreed.
Every alternative has its own advantages and disadvantages, so there might be options that are not available for you or attracted to you. It is always good to know what you qualify for and what you are willing to giving up. Anything is possible, then so is turning your dream idea into a viable business.
About the Author:
Shania is a devoted and conscientious blogger, affiliated with eworldtrade.com, who is passionate about her work. Inspiring others with her writings is her forte. You can follow Shania on Twitter @shaniashaiman to see more of her work and content.