Everyone has entertained the notion of becoming their own boss at some point. However, some people have the drive and initiative to start their own business. According to experts, over 600,000 new businesses open their doors in the United States every single year. Some open up subsidiaries of businesses like a Starbucks or a Waffle House franchise. Majority of these new enterprises will be small businesses run by people just like you.
However, starting a new business doesn’t just require determination, it will also need plenty of capital.
Without hefty initial funding, your dreams of opening a new business will be over before they even begin. However, there are a few tried and tested methods you can use that will guarantee you have the money needed.
Below are four effective ways to get the financing you need to become a business owner.
1. Take Out Personal Loans
One of the riskiest but perhaps one of the most surefire way to get a lot of money in a short amount of time is by taking out personal loans. Unlike a business loan, which can be denied based on the potential profitability of the business and the preferences of the bank you’re asking, these loans depend solely on your financial capabilities. If you are in a great place regarding you finances, you could be in the position to ask for large loans or even negotiate with a mortgage lending company for the money you need. However, this carries a lot of risk for you. If your business can’t recoup the money in time, you may be deep in the red personally. Gage the risk and rewards of this method before committing to it so you don’t lose all your finances.
2. Apply for Business Grants
If you don’t want to take out a loan, you can instead petition to a financial organization or similar enterprise for financial aid. There are many organizations whose sole purpose is to give out financial assistance to business owners. Each organization will have different criteria. Some cater to different types of aspiring business owners, such as women or color.
Some only give financial assistance to specific business categories such as eco-friendly businesses. The trick is to find the right organization to submit your petition to. Thoroughly research the organization you’re trying to get a grant from so you can present the best case possible.
3. Find an Angel Investor
Getting accepted for a business grant can be difficult, especially since there could be hundreds or even thousands of proposals that these organizations have to process. If you’d rather make your case to someone more personally, you can try to appeal to an angel investor.
Unlike venture capitalists, who are more concerned in getting in the ground floor of a possibly massively successful business, angel investors provide money based on other reasons. They can be moved because of your struggles, delighted by the idea of your business, or any other reason under the sun. Angel investors also typically don’t expect their money back quickly and are content to be silent partners. Of course, not every angle investor is the same and you may have a different arrangement with each one you meet.
Make sure you have clear boundaries with an angel investor and go over every inch of paperwork with a fine-toothed comb. This will protect you and your investor from any possible confusion after you’ve secured the finances you need.
The internet can be a great source of revenue, especially if you can gather enough people to do so. Crowdsourcing sites like Kickstarter, Go Fund Me and the like allow you to present your case to millions of users around the world. They can then pitch together to meet your financial goals. Of course, the patrons and people who donate to your crowdsourcing efforts will require something in exchange. This sites usually include goals and milestones.
Should people donate a certain amount, they can expect a gift or product in return for their patronage. This can be a little costly and should definitely be accounted for when you calculate the amount of money you’re going to ask. Crowdsourcing can also be very subjective, and you will have to make your business proposal more attractive than countless other enterprises on these platforms.
Your small business can be the first and biggest step to securing your financial future. However, making sure your fledgling enterprise gets funded can be a massively difficult undertaking. These tips can help you amass the money you need and put you on the path to becoming a boss on your own right.