Now that your business idea is no longer just a brilliant plan, it’s time for you bring it to life. Simple, right?
We hate to break it to you though, because if it’s that straightforward, the world would be a much better place. As an entrepreneur, you may find yourself asking yourself this question the most – How do I get enough funding to start my business?
Funding is important because where else are you going to go to improve your technology, hire the right people and brainstorm a win-win strategy for you and your customers?
As a business owner, you will face not one but several challenges when trying to raise funds. However, it all boils down to who you go to and how you convince that your idea is brilliant enough to dump funds in.
1) Crowdfunding
Through crowdfunding campaigns, you pitch your business plan to the public, set a funding target, and let your product or service impress. Without a crowd, you can’t really do the funding. You don’t just post a request and wake up to a flow of pledges without creating a strategy for your targeted audience. Preparation is required way in advance and networks should be built before of your launch is announced.
Verify any important information you may use to market your idea because nothing is worse than using false facts to back up your statements. Crowdfunding can be thought as to getting a loan from a bank or investor, facts get you credibility and fluff gets you anywhere but that.
Make sure to know the people you’re pitching to and to grab their attention as well, ensuring you capture their imagination while at it. After all, what better way to tell a story then to let the audience tell it to themselves.
2) Angel Investors
An angel in disguise, these are the folks that will be interested in helping start ups like yourself to reach its goals. You’ll get the much needed funding in exchange for convertible debt or owner equity, but it all comes down to meeting them that’s the hard part.
You’ve got to be where they are at in order to spark the relationship. Events have been the go-to place for this, but the digital age has since propelled these “angels” to be more anonymous for most of it. However, with the right tools and platform, you can set up meetings and pitch ideas to them in the digital world.
After scoring a “date”, all you need to do is to impress with your words. Practice open communication at all time in order to be able to connect effectively; remember that you’re aiming to build a bond, not close a sale. Tell a story but get straight to the point, be prepared to ask questions like in a job interview and don’t be shy to cover the funding part.
3) Get a Partner
By partner, we mean to source for a financial partnership. Looking for a finance partnership wouldn’t be any different from sourcing funds for any other type of business venture, simply look around though as you might find one in one of your shareholders or from other people you might know.
A partnership has to be a win-win situation and that’s the idea you selling after your big real idea. A business plan is the foundation to creating all those possibilities and needs the most time and passion to create. Clarify your steps from start to finish in order to help your partner picture the activities that need the funding.
Other than showing competence, hunger and enthusiasm, a well-designed business plan provides your partner(s) with the information they need to help decide and eventually pull out the bucks for your big project.
4) Venture Capital
In the venture capital system, a third party will act as a partial owner of the company. These firms are the guys that will be providing the funds for your company in its early stages, it’s a norm in the tech world and it’s rare to see one without the other. To think of it, some of the biggest tech giants wouldn’t be what it is today without the help of venture capitals.
To get the right venture capital for your business, ask yourself the right questions in regard to your business value, growth, because venture capitals are only interested in exponential growth and it’s best to switch funding sources if you don’t see yourself offering what they want.
Once connected with one, the first thing to do is to craft a well-thought-out elevator pitch stating what your business solves and what it has been doing since its birth. Other important information to prepare includes a business plan, finances, the pitch deck and finally the follow up that eventually locks the deal in.
5) Business Loans
No matter how steady you think your business is, there always comes a time when you could use a little extra cash, particularly when trying to fuel your business in a crisis such as the Covid-19 pandemic. Borrowing to fund business initiatives isn’t completely unfamiliar to businesses and it still is one of the most sought methods to seek funding.
Before hitting that “apply” button, it’s important to see yourself from the perspective of the bank. Learn how they assess you and reassure that you meet the standards for credit scores and history, use these factors to then decide on the type of loan or financing you need. After deciding on a lender, determine the chances of you getting approved in order to keep check with reality.
It can be hard to apply for loans with a bad history, but it shouldn’t stop you from getting the funding. Some products that would be willing to work with imperfect profiles include:
- Merchant credit accounts
- Business cash advances
- Secured business credit cards
- Microloans
- But improving your credit still is the best way to get a loan at the end.
And so…
There are many more ways to fund a business than what we can list out here. However, secured funding eventually comes to those with persistence and a well-thought business plan.
Seek and you shall find as you’d never know what useful information could be lurking around the corner; also make use of the various digital tools to enhance your knowledge about your business in order to thrive and not just survive.
With the right funds, business success wouldn’t be “how” but a “when” instead. Go on, set forth and with these 5 steps, your funds are simply somewhere out there waiting for you.
