You’ve got a great idea for a business. You’ve mapped it all out, and you have a plan to turn that idea into the next big thing. Think Google, eBay, or whatever. As important as that idea is though, there is something equally critical at the beginning of any new business venture: money. In order for your business to get off the ground, you are going to need money to pay for everything – from payroll and marketing to the utility bill that keeps the lights on – and you will need money from right from the start to get that business into gear. Raising capital to start a new business can often be challenging, especially for new entrepreneurs. However, it doesn’t have to be. Here are five great ideas for raising funds to get your business out of the starting gate today.
Go Fund Yourself
Believe it or not, over ninety percent of new businesses are “bootstrapped”, meaning that the entrepreneur funds the venture with no outside support or investors. There are many different ways to do this. You can simply save up a sufficient amount of money to start your new venture, or finance it by working a second job. You can also sell off assets – cars, homes, luxury items – to get the seed money you need to finance your new business. Additionally, could use your credit card (or credit cards), to provide the immediate cash your startup needs. Finally, you could take out a second mortgage on your home to get the money you will require for your new business. Self-funding will give you unprecedented control over your business as you get started. However, your funding in this case, of course will be limited to whatever money you have. It may or may not be enough.
All in the Family
If you cannot fund your business yourself, you could consider asking your friends or family for help. This is an extremely common practice; people want their loved ones to succeed in life and business, so it is only natural that a close family member would want to lend a helping hand. Additionally, new entrepreneurs often have trouble securing financing from traditional lenders, either because of their limited credit rating or due to the risky, uncertain nature of the new business. Family members are often the best and the only option. When securing loans from family members, remember to keep the transaction as professional as possible; capture the terms of the agreement in writing, and be prepared to provide the IRS information on the loan, too.
Find a Partner (or Partners)
If you have a great idea, but lack the funding required to get your business off the ground, maybe it is time to find a partner or two. Pulling in one or more people with requisite funds to pool might be just the ticket for your startup. Ideally, beyond the initial funding, you want to find people who share the same passionate interest in your idea, and who possess skills that you might be lacking (such as marketing) to complement your team. If you have someone in mind to fill this role, you can reach out to them; if not, websites like LinkedIn, or others, can link you up with people who would be willing (and able) to serve as co-founders in your fledgling business.
The United States government is another great resource for startup capital as well, in the form of grants and loans. In fact, in 2012, the U.S. Small Business Administration provided over 5,000 businesses nearly $2 billion in loans to start up or expand ventures in the high tech industry. The government’s small business investment company program can also help entrepreneurs obtain the capital they need to get their business off the ground. Finally, the Federal Government provides hundreds of millions of dollars to entrepreneurs each year through tens of thousands of grants. You can search Grants.gov to determine which grants you may be eligible for, and begin the process of obtaining federal funding for your startup.
You can’t talk about funding your startup these days without talking about crowdfunding online. The Internet has revolutionized everything, including the business of startups. Kickstarter, for example, has helped connect people passionate about their ideas to over ten million people willing to provide some money to bring those ideas to life. Other crowdfunding sites like gofundme have also helped people get the seed money they need to get their good ideas off the ground. Like any other funding endeavor, the key with working online is writing an effective pitch for why you need support raising capital, and then maximizing the exposure and awareness of the fundraising effort.
Private lenders who are willing to provide capital for a new venture are another good option for funding your startup. Working with a private lender will often offer an entrepreneur more flexibility than say, a bank or a government agency offering grants, since the private lender will not likely have as many regulatory or bureaucratic requirements as the aforementioned institutions. However, you will be subject to whatever terms you and the private lender ultimately agree upon – and you will have to find a private lender, too. Fortunately, in the age of the Internet, this is yet another task that has become easier. There are even major private lenders online that entrepreneurs can reach out to when working to find their startup.
No matter how good your idea is, or how hard you are willing to work to make it a reality, any new business is going to require funding from day one. Obtaining those funds is a critical first step of any startup, and while challenging, is nonetheless something that any dedicated entrepreneur can accomplish if he or she is willing to work at it. Whether through self-funding, crowdfunding, government grants, or private lenders, there are numerous options out there to fund your business from day one. Do some research, determine which funding option works best for you, and get your business out of the starting gate today.