A Fresh Start: 7 Business Startup Financing Tips
Have you had an idea for a brand new business? Have you seen a problem in the world and think you have just the solution? Well, awesome! You may well be onto something.
However, you’ll soon realize that having the idea is only one part of the puzzle. Having access to startup financing might be a critical piece of the puzzle. The next crucial step is acquiring the funding to get your business up and running.
With approximately 77,000 new start-ups competing for capital investment every year, securing startup financing can be easier said than done. The good news is that it’s entirely possible. You just need to look in the right places and approach it in the right way.
Having a few tricks up your sleeve never hurts either. Are you wondering how to get the cash together to push forward with your idea? Let us help. Keep reading for seven startup financing tips to help get your new business off the ground.
1. Put Together a Business Plan for Startup Financing
Having a business plan is usually essential to being approved for startup financing. After all, you’re asking people to give you their money.
They’ll almost never volunteer their cash without a solid business plan that demonstrates how it’d be in their financial interest. Take your idea and formulate it into an actionable plan of how the business will develop and succeed over time.
It should consider the current market and your target audience; your financial goals and how you’ll achieve them. It should demonstrate your USP (unique selling proposition) and how you’ll stand out from the competition.
The business plan will go with you into any future investor meetings. As much as anything else, they’ll see that you’re serious and have put thought into the development of your idea. If the financial projections look good, then you could be onto a winner.
2. Ask Your Family
Don’t be too proud or embarrassed to ask your family for startup financing. Indeed, many successful businesses begin with a loan from the “Bank of Mom and Dad”.
It makes perfect financial sense to take this route through the absence and/or minimal interest involved. Unlike banks, your family isn’t only interested in turning a profit. They may even volunteer the money without a second thought.
Treat it seriously though and remember that there’s nothing like money matters to put a strain on a relationship. Approach family members with your business plan to show them how you expect to use their money (and how you’ll pay it back).
3. Use Your Personal Savings to Cover Startup Financing
Think about dipping into your personal savings account as well. You might have saved up a significant amount of money over the years, which could be the startup financing your business idea needs. Many people are understandably reluctant to take from their savings.
However, it does come with a host of benefits. First and foremost, you aren’t going into any debt. That saves you the stress and hassle of not having to deal with fluctuating interest rates or needing to make loan payments.
Another advantage is the fact that you remain the only stakeholder. The profits remain yours and yours alone. Of course, the same is true of the financial risks involved.
4. Find a Business Partner
Business owners often balk at the idea of bringing on a partner. They like being in control and want it to stay that way. The thought of disagreeing over particular decisions and courses of action can be enough to avoid it altogether.
In financial terms, it can be incredibly helpful. You have the idea but they have access to startup financing. It can be beneficial to partner with a wealthy individual who gets behind your business.
Even if they aren’t hugely wealthy there are still advantages to consider. The financial burden (as well as any profits) is shared between you and your partner. It halves the risk and increases the work you can get done now that your partner provided startup financing.
5. Try Crowdfunding for Startup Financing
Crowdfunding has revolutionized the way startups acquire working capital. Set up an online account, promote your idea, and total strangers give you money to help get the startup financing you need.
A huge number of businesses have been set up off the back of a successful campaign. Of course, it’s never guaranteed but with some effective marketing and a bit of luck, you can acquire a lot of capital in record time. Most startups offer particular deals to encourage investment.
Somebody starting a new clothing line, for example, might offer one of the first t-shirts they print to people who invest $100. For $500 they’ll send them multiple items and a hand-written thank you note.
6. Go to Angel Investors
Angel investors are simply wealthy individuals who invest in new businesses. Unlike other startup financing options, they’re typically involved in the early stages. That makes them invaluable when you’re just starting out.
If you can impress them with your idea, they may agree to invest in exchange for equity (or convertible debt). Another perk of seeking financing from an angel investor is the counsel they can provide.
Many angel investors are successful business owners themselves, which gives them a wealth of knowledge and personal experience. Their expertise can make them an active participant in the growth of your business.
7. Secure a Startup Financing Loan for Your Business
Business loans have long been a reliable source of startup financing for small business owners. These days, though, you aren’t restricted to just your local bank. There are many types of lenders who can help supply the money you need.
Now, the exact process of applying for funding can vary between lenders. Generally speaking, though, they’ll look at your business plan, your financials, check your credit score, and decide whether or not to offer you a loan.
Only use reputable sources of funding in order to steer clear of loan sharks and other unscrupulous lenders. A word to the wise is to stay away from merchant cash advance lenders as their interest rates are through the roof.
Boost Your New Business With Startup Financing
Accessing startup financing is a vital step for getting a business idea off the ground and up and running. Unfortunately, with tens of thousands of other people doing the same thing, finding appropriate lenders can be a challenge. Hopefully, the tips and suggestions in this post will help you do it.
Do you want to simplify the entire process of searching for financing? Use our service to apply for startup financing online with ease.