Easy Ways to Get Funding For Your Small Business
Now that you have decided to open a business in the United States and have a complete plan ready for the implementation, do you have the needed capital? Well, do you know how to get the funding for your small business? Below shared are the most useful options that you can explore.
1. Begin with your savings
The tip of using your savings is at the top since it makes complete sense for you to put your hard-earned money in something that you are saying is brilliant. Utilizing the savings that you have earned in funding for your business startup is the best way, even though it might be very little.
In case you are employed, you would be receiving some amount of money as the salary for working in that company. And if you are a student still, you might be getting some amount from your mother, father or brother to use as the pocket money. It is not a bad idea to save some money or even all that you get and is not being used for something important.
It basically means that you are saving a reasonable part of the amount for raising funds for your dream business. This is one of the best ways on how to raise funds for business. And you would need to make small and huge sacrifices if you are really serious about your business plan. Moreover, using the savings would also assist you in attracting more funding for your small business. How?
It is normally easy to persuade your family, investors, friends and even the bank for the startup funding for a small business if you already have some of your own money that you have invested in the idea. This is because it shows that you have faith and confidence that the business is worth the pain and the money spent on it.
It does not matter how much you are earning at the moment, if you are dead serious about the business plan, it is important that you try to save a little from your earnings.
2. Talk to family and friends
In case you have gathered some amount of money, but it is not much, and you need more money as the startup funding for your small business, your family and friends are the people you can confide in for assistance.
Moreover, your friends and family are the people that you would have a substantial influence over and can even persuade them to help you out since they care about you and want to see you grow. Let them know about your ideas and give them the open space to support your plan.
Since they are emotionally attached to you, they would happily provide the funding for small business even if the risks to invest in the startup is very high unlike the investors and the banks who would not choose to invest in your idea. Many famous icons had taken the help of their family and friends to become who they are today with business that are worth a million and some a billion as well.
3. Find a partner who has the cash to invest
Most of the times, just to have the most fabulous idea is not what it takes to initiate a company. Along with the great idea, you might also have the brainpower and the technical skills to develop a flawless product. But in all this, you also need a partner who has enough of cash to put into the idea so that you can make the product, and sell it in the market. This is another great idea on how to raise funds for a business.
The reason this idea is the best is that, if you have a partner, both of you are putting something in the business as you share the ownership equally and eventually benefit equally from it. In short, both of you win in this situation as you would not need to look for funding for your small business, and your partner has got the best method to invest his/her money.
4. Benefit from an angel investor
This investor is willing to provide the free money he/she has in funding for your business startup in return for an ownership stake. And they are known as angels since it is effortless for anyone to raise capital from this type of investor as compared to the others.
In this method for the startup funding for a small business, the investors are high-net-worth or informal business people who are searching for high-return investment plans. A few of the angel investors are entrepreneurs that have become rich from their own company and are not interested to invest in other new businesses so that they can help the new entrepreneurs grow and succeed.
Along with the capital, most of the investors also offer mentorship and coaching that are vital for the young businesses that are sprouting. Now, let us move to the point that has to be shared. Even though these angel investors provide the funding for a small business easily, the demand for the stake of the company is very high.
And the reason the stake is high is so that they can compensate for the exposure that they are taking by funding your untested and new business. Moreover, these angel investors are usually the people that you already know or are the ones who have been recommended by someone who knows them. In short, each and every wealthy person that is in your social circle or your neighborhood is a potential target to assist in the startup funding for your small business.
5. Apply for the small business loans or grants
Do not worry after seeing this since it is not at all that scary as it sounds. In case you are not aware of it, but there are many international agencies and even government organizations that are openly supporting the medium and small companies as these businesses play a crucial role in the growth of the economy of a country.
The reasons why the funding for a small business is done by the government and other agencies through grants and loans is since they produce many service and products that assist the larger industries and companies. Other than this, they also enhance the local technology and create a lot of employment opportunities. The only issue with these methods is that many do not know about them, while the others do not apply for them.
To apply for them, you need to fill out the application that is usually free of cost. It is an excellent way on how to raise funds for business since there is a high chance that you can be granted the loan. Moreover, it is essential to know the difference between the loans and grants.
The grants are not like loans where they do not have any interest rates on them. Neither do the grants have to paid back by the person who received it. But the grants usually need a lot more paperwork as compared to the loans. There are a lot of different grants and loan schemes in the country, all you need to do is search for them. Take the help of Google!Easy Ways to Get Funding For Your Small Business Click To Tweet
6. Use your assets
An asset here is your property or something you own that has a high value. Many of us have things like undeveloped land, extra houses, extra cars, and jewelry in a precious metal that we can live without. These assets are an excellent source of funding for a small business that you are planning to start soon.
There are two ways to use them – either sell them or use them as a security or collateral against a loan from the bank. It is understood that many times it is not easy to sell these assets due to attachment to them. Whatever be the case, it is you who needs to decide if that asset needs to be sold or your dream business needs to be forgotten.
Everything depends upon your priority and the craving to take a risk. If your business becomes successful, you can get better assets later in life, but if it doesn’t, you lose both. The choice is a practical and obvious one, a lot of entrepreneurs find it difficult to make a decision. And if you do not like this idea, there are other ideas in the list that you can take up in funding for your small business.
7. Get advance funding from your clients
This is another method for how to raise funds for a business that has zero capital. The clients that need some service or product desperately are willing to offer half the amount or the full amount in advance for it. And with the advance payment, you get the capital needed to produce the services or the products that can be given to the customers when prepared.
But this method is great for the companies that do not need the funding for a startup, which might be used for the office space or the raw material, etc. If you have everything that you need, then you can use advance payment of the clients to initiate the business from the beginning.
8. Enter into an ‘entrepreneurship’ or ‘business plan’ competition
This might be something you knew about but were scared to go to since you felt that you would not win. And if you had no idea about this, you would be surprised to know that there are a number of business plan competitions that take place every year. A lot of us do not even know about these plans that help in the funding for a small business.
Many types of international and local agencies put up these competitions so that entrepreneurs are encouraged to bring their ideas to life. A few of the organizations’ names are the United Nations, Government foundations, and many others. There are many businesspeople who won in competitions like these and have become successful in their lives.
Getting into these competitions is straightforward. All you need to do is read the rules for the contest and confirm if you are eligible for entering it. Before all this, you need to have a business plan that is a well-prepared one which would put forward your idea in the most convincing, exciting, and straightforward way possible, since this is what would get you the funding for your small business.
Note that if you do not win the competition, you can get a lot of attention from there over your business idea and there can be something good that can come out from being a part over there. You can have the angel investors and bank knocking at your door the next morning to offer the startup funding for your small business.
9. Try Crowdfunding
This is also called crowd financing which is a new and a fast-spreading method of raising startup funding for a small business. Instead of concentrating on some people like partners, friends, and banks, this method permits you to raise a small amount of money from many in a crowd and all at the same time.
Even though this technique has been there for a long time, it has suddenly become prevalent on the Internet. And it gives a great feeling to a person as they easily raise enough of funds from everyone in a short time through this scheme. How it works is simple.
In this, you present your proposal idea in front of a crowd by placing it on a site online. It would be used to convince the potential investors so that they can agree in funding your small business while they get a little percentage in the ownership of the company if they decide to invest in it.
There are many different ideas when it comes to crowdfunding online, and the primary goal is to obtain the funding for the small business in the end. An excellent example of crowdfunding is Kickstarter.com that is only available in the US and the UK.
10. Approach the bank
This point was left for the last since we know how terrible it is at times to go to the bank to avail the startup funding for your small business and get a straight “No” from them. And it is since they have become very used to denying the small businesses and the startup entrepreneurs for the loan they applied for.
Nonetheless, it must be comprehended that the banks usually make a lot of money from the interest that they charge the debtor on the loan they took. So, why is it not easy to get the loan? It has a simple answer – the high risk is the reason!
A company that is large and that has been in business for a while would be more profitable for the business due to the low-risk factor for them to pay back, unlike your new company that has no backbone as of yet. Also, there is nothing wrong about this idea that the bank has since it has been researched and proved that about 90% of the startups usually fail within the first five years and the bank doesn’t want to lose their money.
But this does not mean that you cannot get a loan from the bank. If you get a big contract for your services or products that your company is about to offer, along with your business plan to show the bank, there are chances that you would get the loan you are applying for. And the reason is that with the contract in your hand, you are reducing the risk that the bank is scared of taking.
So, if you have any idea that is not a risky one for your business, you can easily get the funding for your small business from the bank in terms of a loan.
Now that you know how to raise funds for a business, you can easily start off with your plan to make your dream business come to life and succeed in this competitive world. And when you have got the money and need some assistance in incorporating the company, IncParadise can be contacted.
If there is any other way of funding that you know about and that has not been mentioned in the list, do share them in the comments below along with your thoughts.s
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