I assume you’ve got an idea for a business venture. It’s either something you are passionate about, or a gap in the market you think you could fill. But how do you take it to the next level? Let’s face it – the major factor is going to be money. It will take your costly time to create, while your monthly bills continue to come. You want to have a website, premises, employees, to fund marketing and create products – the list goes on.
You’ll need to create a business plan and do your maths first, ready to pitch your business to everyone. Let’s have a look at some different avenues for you to consider.
Your Own Money
This is technically known as bootstrapping! It involves looking at what financial resources you have to offer personally. Can you sell anything to release some money? Can you sacrifice a regular luxury or hobby? Do you have credit cards or savings you can draw on? How about home equity links? You’d be surprised to find this is the most used options when starting a business from scratch. Before taking a further step, weigh up the risks and consider what you will lose if this business doesn’t take off!
Family and Friends
Who do you know who’s interested in your ideas? A gift from a family member may not be too hard to obtain. Other people who like taking chances might have some money to invest in your business. That’s why you need to do your sums and create a business plan in advance. If your relatives or friends are willing to lend you a sum of money, that has a positive side. Yes, they want the money back eventually, but you won’t be paying interest. Your house may not be at risk if you can’t pay it back!
Crowdfunding
Different sources of crowdfunding offer different terms and benefits. The two most famous ones are Kickstarter and Indiegogo. You create a campaign and say I need x money to succeed’. Offer perks and benefits to anyone who promises a donation. Kickstarter will not allow you to access the money if you don’t achieve your full target. Indiegogo will, but first it will deduct its own fees.
Look Local
Do you have a local Small Business Development Centre? Some exist within universities and are a great source of entrepreneurs and contacts. The Small Business Association guarantees loans for some people starting a business. What basically happens is a bank will lend you the money through them as the intermediary.
Banks
A lot of small business lending comes from banks. They won’t lend at the beginning, however, as they don’t finance startups. They will only consider companies that are already up and running, with real potential to grow. If you get to this stage you could request a bank loan. Wells Fargo and the Bank Of America have a mandate to help small businesses.
Business Loans
Business loans are another route to consider. Most people learned from the experts at https://www.bugiscredit.sg/business-loan/ that these loans are used to upgrade technology, maintain operational costs and finance business expansion. If you want a business loan guaranteed by the Small Business Administration you will need to have an excellent business plan prepared.
Angel Investors
These are usually individuals lending their own money. They might be wealthy business people looking at small businesses to gain investment returns. At the end of the day, they are in business and not running a charity, so beware any angel who wants to take over the running of key parts of your business. If you’re trying to obtain $10k to a million dollars, this is an option. Post your business plan on the Gust Angel Network and the Angel List website. More information is found on the Angel Capital Association website too.
Venture Capitalists
Now we’re playing with the big boys!’ You go this route for larger loans than before. The chances of an investment are slimmer here, and if you borrow large you could crash large! The expectation is that you’ll give a 3 to 10 times bigger sum back, and you’ll do it within seven years – no pressure, eh? Check out the National Venture Capital Association for more information. As you can see, the higher the borrowing the greater the risk. It might be great following your dream, but if the maths don’t add up you could end up in a nightmare. Look at the market. Look at your idea. How much will it cost to start, and how much to continue? What is your market audience? How much money do you need and what is the risk level?
If you can self fund this is the best way forward. If not, work outwards from local links all the way to the Venture Capitalists. As you know, many entrepreneurs have crashed and burned. Many others have made a modest income, but some have excelled and created their own empires. You have to be in it to win it’ – so what is your next step? Opt for safety, try a modest long term approach or go for gold’? The results may depend on the excellence of your idea and the business decisions that follow. Unpredictable markets will have their effect too. Good luck!
I’m a 20-something stay-at-home mother and wife. I have an amazing husband, a beautiful daughter, two loving dogs, and a lazy cat. I wouldn’t change my life for anything! I love to read, listen to music, cook and blog!
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