Are you buzzing with excitement about your business idea? Do you lack the capital to invest in your incredible business idea? Then you’ve come to this right place as I have collated a list of the different ways you can fund your next venture! Read through our guide to learn the easiest ways you can fund your business project.
1. Fund It Yourself
This might be the most obvious way, but it certainly is not the easiest! Although this may not be a typical source of funding, it is worthwhile to consider funding your venture yourself. This can save you time and energy as you can start your business as soon as possible. Of course, this does mean that your business idea should ideally be something with a low start-up cost.
If you have your heart set on developing your business idea then funding it with your credit card is another way to go. Of course, this does come with risks, but funding yourself has become a big trend recently especially for young entrepreneurs.
By funding your business using your own credit, you can gradually scale your business when you gain profits from your business. This will very likely come with sacrifices, and it may not be your full vision for a long time, but there is a lot of reward in it both personally and professionally, as you can prove that you can develop and sustain a business for any future investors.
Crowdfunding has become an increasingly popular way to raise money for startups. This is where small amounts of money are raised by a large number of people, in return for a reward or potential profit. Several platforms have become incredibly popular in recent years, which has allowed this to become an incredibly accessible option for individuals who are looking to fund their startup.
Successful crowdfunding involves creating an engaging campaign that showcases your startup and the value it will bring. Raising funds in this way can come with the bonus of campaigning to your target audience. Your target audience will usually be more than enthused to contribute to your venture and see it pan out. You will have immediate access to a community of people you can build a relationship with where you can test out ideas or create a network.
Crowdfunding platforms can even go viral on social media, giving your campaign a huge boost which can provide you with both the funds and the fame to build your business on.
3. Bank Loan
Seeking a bank loan for your business is a pretty traditional route. It can be a bit tricker for startups where the business models are not yet fully established, in this case, banks will usually ask for higher collateral. They may also look for other sources of income or backup income.
To secure a bank loan, you must prepare to showcase your venture and explain the business model, the revenue model, estimated profits and sales, and the estimated growth rate. For banks, the return on their investment is key, and you will need to be able to show how you plan to do this.
4. Business Loans
A business loan provides you with the capital to get your venture off the ground. It gives you the boost you need to make your idea a reality. The loan can be used on marketing, recruitment, buying stock, or anything else you need for your venture. With a business loan, you borrow from the lender with the agreement to pay it back with interest over a certain period of time. For a startup venture, you can usually opt for an unsecured loan which means that you don’t need to put forward collateral. This is great news for you as it means less risk, plus as a startup, you might not have anything to put forward.
To secure a business loan, you will need a business plan and a cash flow forecast. This provides a clear sense of the direction of your venture and how it will bring in profit.
5. Family and friends
Your family and friends will most likely be your biggest supporters, hopefully in more ways than one! The perks of having your family and friends invest in your business or loan you the funding is that you will have a supportive relationship with them. It can be difficult to have to deal with the stress of having investors who want constant updates or who are quite particular. With your family and friends, this is a lot less likely to happen, and you will have more freedom to use the funding how you see fit.
You are also more likely to receive your investment with low-interest rates or maybe even no interest at all! You may be surprised at the connections and support you have around you, and you may never know it until you put yourself out there.
Unlike your family and friends, investors play a more active role. They will have specific ideas and expectations on how their money is spent and will keep a very keen eye on the business and its growth. Investors expect a return on their investment in your business often within a certain period which you will have outlined for them before their investment.
Having investors is a great opportunity as it provides you with the means to expand your business hugely, bringing your dream business to life. They can take a lot of the financial stress away from you, so you can concentrate on the business itself.
There are different types of investors including family and friends, which are called personal investors. Venture investors are experienced investors who invest in businesses to gain a big return. These investments are different from a loan as the investors accept the risk that they may not make their money back, this is why investors can be incredibly selective.
If you are a young entrepreneur, an angel investor may be a good fit for you. These investors provide capital for startups usually where others would be reluctant to invest. Angel investors provide funding in exchange for equity.
With a range of ways to fund your startup, it’s up to you to hammer out your list of pros and cons and figure out which option is best for you and your biz! By following our guide to the T, you can find the easiest and most accessible way for you to fund your little startup and watch it grow until it can sustain itself and generate profits.