5 Ways To Fund Your Business Idea
So, you’ve got a wonderful business idea, and you’re prepared to take the big leap! Congratulations, you’ve already done something that most won’t ever try. You’re destined to be a leader! Unfortunately, coming up with the idea is the easy part. The hard part is finding the funding to get off the ground. You’re going to need to prepare a startup pitch deck. Most businesses need an injection of cold, hard cash to get going. It costs money to develop a product, set up a website, and put a marketing campaign in place. Where are you going to find this money? Today, we’ll walk you through some of the most popular routes.
1. Your personal savings
Most entrepreneurs use their own savings to fund their initial idea. It’s a daunting prospect, especially if you’ve spent years building up your pot of money. Sometimes, it’s your only option. If you’re right at the beginning of your venture, it’s too early for investment, and it might be too early for a loan. You’ll probably have to fund the first few steps yourself. This is no bad thing, and it shows investors and bankers that you have a strong believe in your company. After all, if you don’t invest in your own business, can you really expect others to do so?
2. Friends and family
It’s a humbling experience, asking your friends or family for a loan. However, don’t feel too proud to ask. In some cases, a loan from family or friends is more flexible than a bank loan. You can set realistic terms of repayment, and there is less pressure over your head. Approach them as you would a bank or investor. Outline your business plan, and explain how their money will be used. Most importantly, give them a realistic timeline for repayment.
3. Business loan
The tried-and-tested route is, of course, the business loan. Approaching a banking institution or lender is easier than ever. You’ll need a solid business proposal and executive summary. The bank is looking for a smart investment, and a guaranteed return on their investment. They may also ask for small business collateral to secure the loan. This could be anything from your business assets to a car or your home. The more money you ask for, the riskier the collateral.
At a certain point, it’s wise to seek investment for your business idea. A cash injection from an angel investor or venture capitalist will give you the boost you need. However, it’s crucial that you only approach them at the right time. Approach them too early, and you could end up giving away a huge chunk of your business for a small sum. Start generating revenue, and building a reputation first.
Our last option is a new, but effective, course of action. By using crowdfunding platforms like Kickstarter, you can ask your community for money to get started. You set a target, and outline your plan. If people like the idea, they invest a little money. The virtual reality headset, Oculus Rift, used this method, and was recently bought by Facebook for $2 billion. It certainly works for some!
As you can see, there are plenty of options for funding your startup. Which would you choose?