Creative Tips for financing your start up business

Posted by on Aug 29, 2016 in Business | Comments Off on Creative Tips for financing your start up business

Starting up a business is getting easier these days and we have compiled a list of ways you can finance your first endeavours. The first attempt is usually the hardest in the business world as resourcefulness is something that is learned over time. The old fashioned way used to be business loans which can be very hard to get. You might have had to give detailed forecasts of how you foresee your business growing. This can be a pain to do and more often than not has very little accuracy. Nowadays there are plenty of options for entrepreneurs. Some of them are:
Crowdsourcing: Crowdsourcing has becomes extremely important these days and is fast becoming the best way for entrepreneurs to fund their endeavours. Every day you can see new inventions and ideas portrayed through Indiegogo and Kickstarter. You can raise money for rewards or by selling products. If your campaign successfully goes viral you stand the chance to raise millions. A great example is Pebble smartwatch. Be sure to note how much money you get to keep. Most often when you don’t reach your goal the money is returned to the donors.
Angel Investors: Angel investing options have been there for decades but are now more prominent. You can get great amount of seed funding through angel investors by presenting just your idea alone. Angel investing firms can be found all over the world. Companies like Sydney Angels, New York Angels etc are well known. With angel investors an important point to note is that you most often will lose an equity stake even before you have begun. This can vary from 10 to 30% depending upon the investor. Angels do a good job of accelerating the rate with which you find resources too.
Preselling Products: This is way of raising money is becoming more frequent these days. If you have a pre-existing website that generates traffic for a subject that is linked with your new product you can even get a lot of presales going for your product. It’s sort of like a Kickstarter milestone but here the onus is completely on you. Preselling can be rewarding as well as slightly risky because you need to be able to deliver on time and anticipate the inventory size.
Good old F&F: Family and Friends are a boots trappers dream. This is a good way to start but make sure you progress enough with the capital you get to fund yourself through one of the other means mentioned here. This is vital for the survival of your business. Also when you constantly borrow from friends and family, it can take a toll on you mentally if you need to repay them. Try to borrow as little as you can from as few as possible.
Business Grants: This method’s potency is often underestimated. It’s similar to getting grants as a student but this time you will be pitching to business innovation and research institutes. You need to read the fine prints of these grants as some of them may make you give up some or all of the intellectual property you develop. This process is time consuming and unlike others can require a ton of paperwork. If you are eligible it’s definitely good to have a look.
Asset Sale: If you are really focused on your business or idea then you may even want to sell assets you own to finance your new endeavours. You can sell your expensive car and adopt a frugal approach which will give you a lot of capital in the short term. You can support marketing activities this way too. You can sell or rent your property too and travel whilst you work, this is a great way to learn and meet you people.
There are always enough and more ways you can finance your business. Other ways like home loans, credit cards and the likes, can also be of use depending upon the circumstance. Make sure you do not sell your soul and read all the fine print involved in every step of the way. This is important as your financier may end up owning more of the company than you even before you have produced a single product. You need smart partners and investors. If you are looking for 2nd round funding then Venture Capitalists can provide substantially large sums that can help you grow your business rapidly. Bootstrapping initially can help you retail all the power but VCs can require you to relinquish some of that so make sure you tread carefully.