You may be reading this with nothing more than a dream idea for a business and a vague plan. That said, it isn’t too early to research and vet out possible resources for business funding. This important funding can help you get off the ground, set up shop, and build credit for inventory, equipment, and supplies. For some of you, a business may already be in your hands, you just need more money to fund a new idea or to help your company grow. Either way, there are multiple ways of acquiring business funding. Which ones are the best and easiest? Check out these three.
Have you seen shows like The Apprentice or Shark Tank where business owners fight to get funding from a rich investor? Effectively, that’s what an angel investor is, only minus the TV hysterics. They are a business person with available capital to invest in new businesses. If they like and believe in your idea, they extend cash to you in exchange for contractual shares in your business. In other words, when you make money, they make money. The upside of this is that you don’t owe anything upfront, and you still control your business.
In many cases, it’s easier to get a business loan from a bank than it is to find an angel investor, though there are still plenty of hoops to jump through. Mainly, you have to prove that you are worthy of borrowing money from a lender and will have the means to pay it back in a timely manner. How do you do this? By displaying a healthy financial history and current assets! Some business owners even download software like FISCAL to help analyze their finances for credible data to show banks and lenders. The business plan has a lot to do with how a bank might see your creditworthiness as well. This is especially true if you can show a strong financial forecast and plans to keep things afloat in downtimes.
The third option is almost like a combination of donations and investors. Crowdfunding is where you get many people to pitch in whatever they can afford to back your business. There are numerous crowdfunding sites on the web for various projects. Some of them are for personal goals and charities, but some are much larger for business ventures. This type of funding has become popular for company startups that already have large fans bases online. This way fans become instant customers and support the new business venture immediately. It might be harder for startups to gain funding for large projects simply because they need a substantial amount, but online influence helps get the ball rolling in many cases.
Interestingly, some crowdfunding campaigns offer incentive bonuses or prizes, depending on how much is donated. In some cases, even small shares of the company are offered. It’s an interesting and popular concept in modern times but worth considering.
If you look around, you can find other funding options for your company. Nevertheless, you won’t likely find any that are as good as these three unless you have a wealthy family to borrow from. Realistically, it’s probably a good idea to explore the first and last options before settling for a standard loan that costs so much over time.