There are a wide array of costs associated with getting your business up and running. Finding enough start-up money to make your ideas a reality can be a challenge for any would-be business owner. Check out these ideas for some inspiration on where to look for funding for your new business venture.
How Can I Get Start-Up Money for My New Business?
The easiest to access option for raising funds for your business is to tap into your own resources. Some people have significant amounts of money in their savings that could give you a good start towards covering initial expenses for your business. Just be sure that you have enough money to cover your living expenses left in savings once your business is funding, as you may have to forgo a salary for the first few months of your business’ operation.
Selling assets may be another good way to raise funds to go towards your new business. Review your finances with great scrutiny to decide what you really need and what can be set aside to help you towards pursuing your goal. Although you may be reluctant to part with any assets now, if they help you realize your dream of starting a business, it will be a worthwhile tradeoff in the end.
Friends or Family
Another option available to you when looking to fund your business is to turn to friends or family. If you have a great idea, pitch it to them and see if there’s an interest in getting on board. Some people who believe in the idea for a business you have may be willing to put some money up in exchange for the possibility of seeing a return on their money once your business takes off and starts turning a profit.
Just be sure to avoid any negative ramifications that having a deal like this with someone who’s close to you can lead to. Set expectations clearly, and get any agreement you have in relation to paying back the loaned money in writing so that everyone has a clear understanding of their part in the arrangement. That will avoid any damage to your relationships caused by financial strains as your business gets off the ground.
Credit cards give you access to additional funds that can cover the initial costs you need to get your business running. That could involve making use of your personal credit cards or opening up a business credit card for your new company. Minimize your other spending on these cards in order to maximize the amount of credit you’ll have available to put towards business expenses for your new venture.
Be cautious when choosing this route to fund your business, as accruing too much debt that you need to pay back can cripple your new business before it even gets off of the ground. Credit cards can often come with high interest rates, so make sure you know exactly what you’re getting into before spending on one. Research the institution you’re getting your credit card from to make sure it is a reputable service before taking a line of credit.
Home Equity Loan
An additional source of funds may be available to you if you’ve built up a substantial amount of equity on your home and have a very good credit score. Taking out a loan against your home’s equity gives you a lump sum of money to cover your initial expenses. That can make the difference between being able to get your business off the ground or not.
You will need to repay this loan over time, so be sure to factor this additional expense into your business’ early financial plan. The good news is that this type of loan often comes with a rather low interest rate, making it an attractive option when considering ways to raise start-up money for your new business venture.
Financial backing from a well-established institution can be a great benefit that gets your business started. You may want to go to the bank that you already have a relationship with for your personal use or start working with a new bank known for supporting businesses. Taking out a loan from an SBA-guaranteed lender gives you extra reassurance that you’re dealing with a reputable entity.
However, the availability of these loans isn’t guaranteed. Banks will want to see that you have a rock-solid plan for your business before putting any of their own capital at stake. Your credit score will also be taken into consideration, of course. The bank may also want you to invest some of your own funds into the business venture to show them that you’re serious about this business plan, as well.
Venture Capital Firms
Venture capital investments can give you the start-up money you need to get your idea up and running. You’ll need a clear idea to pitch to the investors to get them interested, so make sure you’ve thought about every aspect of your plan before going to request investment. These investors are most interested in new businesses with a high potential for growth, so be sure to highlight the room for expansion you see for your business.
Usually, investments such as these come in exchange for a share of ownership of your company. The investor may also want to take an active role in running your company in exchange for risking their money on your idea. Be sure you weigh your need for the money to get started against this loss of some creative control over your company before taking venture capital investment on board.
Small Business Grants
In addition to private entities, you may be able to access government funding for getting start-up money to launch your business. There are over 1,000 grant programs that you can review to find one suitable for the business you’re looking to start, giving you a valuable starting point that can help you begin on your journey to being a business owner.
Just be sure to read the stipulations that apply to each grant available. Some may require that you meet certain terms and conditions, or that you pay the grant money back over time. Not all grants come with these sorts of stipulations, but it’s important that you read the fine print to know exactly what you’re getting into.
Economic Development Programs
As well as grants in general, there are certain programs designed to help business owners in certain circumstances. For example, there are government services designed to help businesses in economically disadvantaged areas. Doing extensive research can help you find any programs that pertain to your situation to ensure you aren’t leaving any money on the table.
There are Women’s Business Centers all over the country that can assist with female-led businesses in need of funding. Minority-owned businesses have similar programs available that can provide vital resources for your company. Former service members should also look into the Veteran’s Outreach Business Centers that can help their ideas get the funding they need.
If you’ve got a great idea that people will get excited about, crowdfunding can be a viable way to raise money to get your new business up and running. There are several websites that can facilitate this type of funding. Build social media buzz and create a rewards scheme to offer people in exchange for their financial backing. If you have an idea that can get enough people interested, you could get your entire startup money through this method.
These are just some of the options available to you when you’re looking for the cash that you need to get your business underway. Check out David Vs Goliath Podcast for more tips on how to succeed in the world of small business!