5 Smart Ways for Funding Your Business Idea
Many entrepreneurs decide to fund their startup on their own. They scrap together all personal funds they have, including their savings accounts, credit cards, and home equity lines of credit. This is what we call bootstrapping and it sounds great given the fact that you won’t have to worry about mountains of loans or monthly payments. Still, what happens if you don’t have enough money for funding your business idea to bootstrap? Worse yet, what would you do if your funds run out?
This is exactly why you should secure some outside funding sources on time, too.
Funding Your Business Idea the Smart Way
1. Leverage Crowdfunding
Many startup and small business owners consider crowdfunding one of the most powerful alternatives to traditional bank loans. The idea behind it is pretty simple – you spread the word about your business idea online and fund it by raising small amounts of money from a wide group of people.
There are numerous crowdfunding platforms like Kickstarter, IndieGoGo, GoFundMe, where you can create your account, start building a wide online community, and explain the big purpose to raise money for funding your business idea. This is also an amazing way to promote your new business and hook your target audience’s attention. Keep in mind that there are different types of crowdfunding and, before you opt for this option, you need to do your research.
2. Apply for Government Grants
When starting a business, we all count on government. Government grants for startups and small businesses do exist, but securing them is not always that simple. They are given to the businesses in certain fields and industries, especially those engaged in scientific research. For example, one of the most popular sources of government grants for high-tech companies is the Small Business Innovation Research (SBIR) Program, available to the businesses that are contributing to the scientific R&D. There are also some other types of government grants, including state grants, local grants, corporate grants, and nonprofit grants you may take into consideration.
3. Promote your Business Idea Actively
To raise brand awareness and get more donations, you need to let people know about you. Be active on social media and invest in your online presence. Furthermore, motivate your audience to give you a feedback by asking them to participate in paid surveys. They will feel appreciated since you value their opinion.
Start attending all major conferences in your niche, competitions, workshops, or even use coworking spaces to connect with other people in your industry. Organize product launches, auctions, opening night events – anything that can bring in some cash.
4. Look for Angel Investors
Bootstrapping and crowdfunding are awesome business funding options, but they’re usually not enough to really get going. To get great office space, hire people, buy proper equipment, and cover all costs, you will need to look for an investor. And, finding angel investors could be a great starting point. Namely, these are usually authoritative business people with a high net worth that want to invest in the companies they consider promising. There are numerous sites like Angel Capital Association or AngelList that will help you find angel investors in your niche.
5. Take out a Bank Loan
Getting a bank loan may be a daunting task, as they have pretty strict rules when it comes to supporting startups.
First, to be eligible for a bank loan, you need to deliver an extensive business plan and have a spotless credit record, which is impossible for the majority of businesses that are just starting off.
Second, it sometimes takes weeks or even months for a bank to approve your request. So, if you’re in hurry, maybe you should consider some simpler financing methods, such as online loans or specialized loans.
Instead of a large bank, try starting with a community-based bank that will understand your financial situation and provide you with better funding options. Do your research, see what type of funding is available to you at the moment, and keep your options open. Ask for professional help and make sure you know what you’re signing up for.
Back to You
You may have the most brilliant business idea in the world, but if you don’t know how to fund it, you will fail. This is why you need to get the money you need on time. No matter if it’s crowdsourcing, applying for a bank loan or a donation from an angel investor, finding the right funding option will help you turn your idea into a proper business and keep it afloat.
What funding options do you use to keep your business’ growth sustainable?
This article on funding your business idea was provided by Lauren Wiseman. Lauren is marketing specialist, contributor to bizzmarkblog.com and entrepreneur. She helps clients grow their personal and professional brands in fast-changing and demanding market, strongly believing in a holistic approach to business.