The first hurdle any aspiring entrepreneurs face isn’t marketing nor operation, nor sourcing the raw materials for the business. It’s finding the capital to jumpstart your business idea. Now, you might say that you’ve heard many successful entrepreneurs claim they started their business from zero- and that might be true, but the fact remains: you need capital to start a business.
Almost everything surrounding a business needs financial resources. From buying materials to hiring employees, to even having the funds to file for the necessary paperwork, this is where the capital is spent on. And unless you’re obscenely wealthy, finding the finances to fund your monetary dream can be quite challenging. Here’s how you can overcome that.
Know How Much Money You Need
First things first, know how much money you really need. You can find this out through your planning process, and it’s one of the most important pieces of information you can take out from it. By having an estimate of how much you need, you can begin your resource-hunting process. Once you know how much you need to kick off your business, you’ll be in a better position to start looking for grants or investors.
And this time, you have a figure you can work with, allowing you to make judgment calls on whether a deal will be enough to cover for your initial capital. Be careful, however, as your name and finances are still at stake. Starting a business can sometimes be an all-or-nothing situation, so serious planning is required.
Use Your Own
Of course, your business dreams are best financed by yourself. And if you have a considerable amount of money, then that’s where your capital should come from. Be it through the inheritance of savings, using your own money is the “conventional” way of funding your business dreams. Of course, the risk of losing it all remains, but many successful entrepreneurs risk their all and find success in the process.
Get Investors to Fund Your Business
You can’t start a business if no one is willing to support it, and if you have a particularly engaging business idea that you think is worth pitching to investors, go at it! For business ideas carrying particularly strong initial interest or unique selling propositions (USP), combined with a good business plan that’s set in the long term, getting venture capitalists to invest in you might be a good idea.
One of the most interesting innovations within the financial technology industry is the means to transfer funds in an efficient manner. This has led to the rise of e-commerce, and interestingly enough, even to online crowdfunding platforms. These crowdfunding websites allow business owners to pitch their ideas to a wide variety of people who might be interested in the said business.
Entrepreneurs can then make a “proof of idea” of sorts, creating an early batch of their product to sell to early investors. Through these crowdfunding platforms, a business idea can be tested to see whether there’s enough interest in it. And if there is, the financial gain from crowdfunding can then be used to generate an actual business.
Get a Small Business Loan
Something many people aren’t particularly aware of is that the government is actually willing to provide loans to small entrepreneurs. After all, the success of the small enterprise is something that will also benefit the national economy. Because of this, you can file for a small business loan to get your business started. There’s a wide variety of small business loans to choose from.
… or a Traditional Loan
If not a small business loan, you’re free to utilize traditional loans as well. It’s under your personal name, so there’s a sense of danger but getting into business is dangerous overall anyway. Consider looking for reputable hard money lenders or even microloans. You might be surprised by the sheer amount of loaning services available nowadays, and taking advantage of them to grow your idea (and finances) will be a business story worth telling.l
Get a Grant
As mentioned before, the government creates opportunities for citizens wanting to get into entrepreneurship, and they have many programs definitely worth looking into. An interesting one is grants- although often rather difficult and have a very specific set of requirements to be eligible. Should your business fall into the category that deserves a grant, take advantage of it.
Once you have the capital, all that’s left is to execute your plans. Execution is really what’s critical. No matter how big or small your capital is, you can make it worthwhile if you planned well and really understand the industry you’re going into.