Many new businesses fail within the first year. And the common reason is the lack of funding.
Here’s the thing: Money is the bloodline of every business.
Nonetheless, starting a business and making it successful is a long and winding road. And you less likely to traverse that road without sufficient funding.
That said, we will share with you eight different ways you can raise funds for your dream business and make it a reality.
1. Business Loan
Applying for a loan is one of the most traditional ways you’ll be receiving funding for your business.
Any reputable bank will give you a loan as long as you have a great business plan and some backup properties. This is to assure the bank that you’ll be able to pay the loan back.
However, it’s not always a great idea to apply for loans. More so, during the early stages of your business.
Nonetheless, you can opt to apply for a business loan if you already have your business model on paper. That said, consider applying for an SBA loan. That’s because it provides favorite rates and terms.
All you need is to meet these requirements:
- You need to be in the business for at least two years or more.
- Your business should provide you with a solid annual revenue (at least an average of $100,000)
- A good credit score (should have a credit score of around 640+)
2. Friends and Family
Friends and family are also an excellent way to get your source of funding. That’s because these are the people who believe in you and will most likely loan you some money to pursue your dream of starting a business.
However, remember to assure your friends and family that you can repay your loan with interest. And you don’t necessarily have to add the interest on your repayment. It can be a 1% equity share in your business.
Crowdfunding is the process of funding your business by raising small funds from different people.
What makes crowdfunding approachable is that there are websites that will enable you to raise business funds from the crowd. All you need is that you have a clear and concise business pitch and product prototype. That way, crowd funders can have reason to help fund your business.
In addition, crowdfunding platforms will ask you to provide “gifts” to your funders. It can be in the form of early access to the app you are working on.
If you are wondering where you can start a crowdfunding campaign for your business, check out these websites:
4. Angel Investors
Angel investors are accredited individuals with a net worth of over $1 million or an income that exceeds more than $200,000. Usually, these people operate alone. However, they might also team up with other angel investors they know and form a fund.
Now, angel investors can be a great source to help you fund your business. But first, you need to put together a solid business plan, along with a great pitch. This includes showcasing where your business currently stands and its potential.
However, just because they are called “angel investors” doesn’t mean they will invest and forget. That’s because angel investors will require an equity share in exchange for their funding.
That said, an angel investor must be registered with the Securities and Exchange Commission (SEC). The same thing goes for and private equity investment company.
If you think you cannot start your business with the fund you have, consider looking for a partner. This can be a friend who shares your dreams and visions. That way, you can easily convince your friend to help fund your business and run it with you.
It is better to run your business with someone than let your dream go down the drain.
Still, many people are skeptical of partnerships because of the risks involved in them. However, there are also many reasons you should consider partnering with someone. And having someone who can help fund your dream business and make it a reality is just one of them.
Apart from that, two correct heads are better than one. A partnership gives you plenty of room to brainstorm, as well as a concentrated effort to build your business.
Over time, this will help you save up enough money to start your business.
6. Apply for Grants
A grant is usually a fund or money given to someone by the government or organization to support their cause or pursuit.
However, unlike loans, you’re not required to pay these back. Nonetheless, grants are often competitive and need your business to meet eligibility criteria.
So, when considering this fundraising option, you should have suitable paperwork along with a solid business plan.
There are also many programs designed by the government that provides some form of capital for small businesses. Furthermore, various organizations and NGOs also offer grants to people who want to start a small business but lack capital.
Bootstrapping is usually a form of self-funding. This involves stretching your resources and finances. Meaning, you’ll be starting your company with whatever assets or money you have at the moment.
This is an excellent choice as it gives you complete control of your business, with no debts or any obligation from a third party to think about.
In most cases, you should consider bootstrapping as your first option when starting a business.
However, not everyone has ample assets that they can use to fund their business. If that’s the case, it would be best to seek financial help from friends and family or look for a business partner.
8. Start an Odd Job
If you don’t have enough savings yet to start your dream business, then you have to look for ways to make it reach up to at least 40% of what you need.
Freelancing is one excellent way to do that.
However, this can be sometimes challenging, as you still need to look for a job that will suit your lifestyle or personality.
However, you also need to keep in mind that you’re just not doing the job just for the fun of it, but for the money to make your dream business a reality. Use that as your motivation.
You can look for many online opportunities that allow you to earn money and raise funds for your business. This includes dropshipping, freelancing, affiliate marketing, blogging, and so on.
Whatever type of side hustle you use, the end goal here is to earn enough money that will allow you to start your dream business.
Over to You
There is no perfect way to raise funds for your business. Plus, you should expect some challenges and downsides when starting a business.
The takeaway here is to start with a good business idea. That way, you can build a robust business plan and strategy. After all, investors would look into your strategy to gauge whether your business idea is worth investing in.
Regardless, you now have an idea of how you can fund your dream business and make it a reality. Hence, don’t be discouraged just in case one type of funding doesn’t work out.
By being diligent, resourceful, and persistent, you’ll be able to raise enough capital to make your dream business a reality. Good luck!