You’ve come up with a new business idea, and now you need to fund it! Raising the capital you’ll need is one of the most critical steps in starting your business.
First, you’ll need a clear business plan that shows how much capital you need. Consider start-up expenses like equipment and materials, marketing, office space, logo design, and insurance.
Local Small Business Development Centers are great places to help you get organized.
They can also help you determine various sources of funding. Different options are available depending on what you need for your start-up.
Below, we’re diving into some of the best methods and places to seek funding when trying to get your new business ideas off the ground.
Personal Savings
Tapping into your savings is probably the easiest way to fund your business.
You won’t need to waste time filling of loan or grant applications. Using your savings can be a simple way to get your start-up off the ground if you have the funds.
Investing your own money also increases your chances of getting investors on board. Using your cash shows potential funders that you’re committed to the business and believe in its future.
Just make sure not to spend all of your life savings on your new business ideas.
Instead, it’s probably better to focus on creating a sizeable down payment and then funding the rest of your business using the following ideas.
Crowdfunding
Crowdfunding allows you to reach a considerable amount of people who may invest in your business.
While you may receive significant contributions from a single lender when applying for loans, it is often easier to get smaller amounts contributed by a more considerable number of people, which is exactly where crowdfunding comes into play.
Sites like Indiegogo and Kickstarter have helped entrepreneurs raise billions of dollars.
Crowdfunding may mean that a funder pledges to buy your product once released or that people who donate are listed publicly.
If you choose to crowdfund, you’ll need a compelling proposal to stand out against the competition. The great thing about using crowdfunding sites is that you’re getting free advertising for your product or idea!
And don’t forget to include your brand’s logo on any crowdfunding collateral you may wind up creating. Design your next business logo or graphic with LogoCreator.
Business Loans
Taking out a small personal or business loan is another option for funding your start-up.
The main benefit of a business loan is that it can provide you with access to a large amount of capital. Most banks and credit unions will have an advisor you can speak with about applying for a loan.
You will need a detailed business plan that shows why your business will succeed and what steps you will take to get there. Consider the loan terms, including interest rates and how much time you have before you need to start paying it back.
Microloans are another option to consider, particularly if you are seeking a smaller amount of funding.
Government Grants
Unlike regular business loans, grants do not need to be repaid. This can make them seem like an ideal choice for businesses just starting.
Unfortunately, government grants can be challenging to obtain, and most are limited to established businesses.
Many federal government grants are geared to industries like research and development.
State and local governments are more likely to have grants available for start-ups. Regardless of the level of government, expect a complex application and a lengthy approval process.
You can search Grants.gov for federal grants and find more information on how to write a grant application.
Funding Your Start-up
You have several options when it comes to funding your business. Have a clear idea of how much money you need and what you will use it for. Consider your ability to back your start-up before seeking out other investment opportunities.
Whether you choose crowdfunding, loans, or grants, be sure to understand what you agree to.
Raising capital can seem daunting, but it’s the first step in making your business a success!
