Getting the startup business funding you need can be a bit tricky if you have nowhere to look. Are you an entrepreneur looking to make an impact in the world? Do you have an idea that will make everyone’s lives better one way or the other?
In today’s world, it’s encouraging to see the many startups that are creating, innovating and even disrupting. Startups like ChowNow, Slack and Acorns are doing big things in their respective industries.
You might be thinking that these are great startups with many smart people running them, and with investors showering them with money left and right. How in the world are you going to be able to compete with that?
The fact of the matter is, the formula for any startups is the same. Whether big or small, you need a) a great idea that will be solving a problem b) the passion to keep going even if it fails and c) the business funding to make it all happen.
I am going to show 5 things you need to know right now to get the funding you need for your startup.
Self-Investment: (Best Startup Business Funding)
This is a no-brainer and the best startup business funding option available. If you’re on the verge of starting a business, , you have some money set aside perhaps in your savings account to get the initial costs covered. It’s true, to make money, you need to spend money.
What I’ve learned in the last 10 years of starting startups, to attract potential investors you need to have demonstrated that you believe so much in your product that you were willing to go above and beyond for your business.
You show that you have skin in the game by utilizing your own resourced to get the initial costs covered.
You need to keep in mind that starting a business is also a risk. If you’re using your own funds to start your business, you have to prepare yourself for the worst. You may see your savings go from a lot to almost nothing.
That’s because there’s a lot of trial and error when it comes to starting a business.
Investing your own money presents also a major advantage. You get to run your business and spend the money as you see fit without having to explain yourself to other investors involved in the financial aspect of your company. Thus, keeping yourself accountable.
Credit Cards & Loans
Financing a business with a credit card or a loan can be beneficial especially if you don’t have a lot of money set aside or if you don’t want to use your money to start the business.
Typically, you’ll find that a credit’s minimum payment is significantly pretty low. A loan, attached to a low fixed interest rate, can prove to be beneficial as well in the sense that the amount you’re approved for is pretty large compared to a credit card and can help you reach your business goals quicker.
However, financing a business with a credit card or a loan can be a risky move. If your business is not where it needs to be and your profit is not growing, then you’re running the risk of falling behind on your payments.
One missed payment on a credit card or a loan can prove to be disastrous for your credit.
This financing method should be utilized with a clear strategy in mind. The goal of using a credit card or a loan should be viewed as temporary rather than long-term financing. Here’s a great list of major creditors known for issuing startup business funding.
Keep your day job
Starting a business doesn’t mean you need to quit your day job today to focus on it. It simply means that in addition to your day job, you’re giving your time and energy to a side job that will eventually in the near future become your full-time job.
Too often, you find good people with good jobs having the misunderstanding that they need to leave their job to start a business full time.
Sooner than later, you will be hit by reality. Your personal bills will not stop coming just because you don’t have a job. So be smart when making this decision.
How will this affect your family? Your kids? While keeping your day job and working on starting your business requires also a measure of sacrifice. For example, expect to have little or no social life.
While your friends are getting together on Saturday night, you may have to say no to that. Here’s a great article on other entrepreneurs who kept their day job while building an amazing business.
Friends & Family
Many entrepreneurs wouldn’t be where they are today without the help of a friend or a family member. If you’re one of the lucky ones to have such backing, then that can prove to be very beneficial to your business.
Of course, you will need to give away some equity to make investing into your company even more attractive, but nevertheless, this is a good option if you’re still trying to keep a measure of control.
Unlike your friend or family member funding your startup business, an investor is someone who invests in other businesses for a living. Typically, the investor will invest his own funds into your startup in exchange for a percentage of the business.
There are many types of investors but the most important thing to keep in mind is, when bringing an investor on board, their goal is to see their startup business funding multiply.
An investor may decide how the funds will be spent, because there are high risks associated with that investment.
An investor will not just give you his hard-earned money without having to take a look at your books. They would want to see your company’s financials which will show them how responsible you are with your business’s money.
Hopefully, by the time you have an investor looking at your business, you had a bookkeeper or other online bookkeeping services to clean and organize your finances in a way that’s easy to read and understand.
If you’re not sure on how to choose a bookkeeper, head over to this article: Online Bookkeeping Service: 5 things to consider.
You may lose your potential investor if you don’t have your finances in order. How can you be responsible for the new funds if you are not responsible with your own? That’s an important thing to keep in mind.
There’s nothing more exciting to see: what was one day an idea, now a successful business. But, like every business out there, it needs money to get to the next stage.
Whatever funding option you choose, make sure you have a plan on how you will manage the startup business funding.