Negosentro.com | 7 Creative Ways to Get the Funding You Need to Start Your Business | Unfortunately, not all businesses make it. One of the biggest reasons small businesses fail is due to cash flow problems. In fact, according to Score, a whopping 82 percent of businesses end up closing due to this very issue.
While many businesses close because of financial struggles, meanwhile, other people are trying to merely start up their business. But like current business owners, prospective business owners often share a similar struggle: not enough money. They need to look for the Cheapest loans they can get to start their business.
If starting a business is your dream, but you don’t have the finances in place to do much right now, you’ve come to the right place. With the following creative ways to get funding, you’ll be financially ready to open your business in no time!
Sell your personal assets.
Although it’s not the most ideal approach for many people, selling your personal belongings is a great way to get the funding you require for your startup. This is a great approach if your startup won’t cost a significant amount of money and, thus, you don’t want to, and won’t need to, go out of your way to borrow money.
That said, raid your closets, attic, or basement for any old assets you might no longer want or need: clothes, jewelry, furniture, home decor, and so on. Every item, big and small, counts. These items can then be sold online, at garage sales, to pawn shops, or even directly to loved ones.
Make sure that before selling your beloved assets, especially antiques, that you do research to find the value of such items before mistakingly selling them for a potentially lower price. Get the most bang for your buck!
Apply for business grants.
When it comes to starting a business, even a relatively small startup, one of the first financial options that may come to your mind is a loan. If you want to avoid 1) paying back borrowed money and 2) paying interest on that borrowed money, a great alternative to funding your future business is to try to get a business grant.
Grants.gov lists plenty of grant opportunities for pre-existing and future business owners. If and when you get a business grant, this money doesn’t have to be paid back nor does it have interest tied to it, leaving you with potentially thousands of dollars to start up your business.
There are various grants for different types of business owners and prospective business owners: women or single moms in business, disabled or veteran entrepreneurs, minority business owners, those starting a business within a specific industry, and so on.
Do keep in mind, however, that business grants are considered taxable income, not gifts or donations. Other than that, this method of funding is essentially like receiving free money that you can use to start or improve your business.
Can’t get a business grant or still require more money to fund your startup? Crowdfunding is a great way to get the finances you need. There are different types of crowdfunding websites you can consider using: reward-based crowdfunding, donation-based crowdfunding, and peer-to-peer lending.
Reward-based crowdfunding involves individuals contributing a small amount of money to receive some sort of reward. Via donation-based crowdfunding, however, individuals contribute money without getting anything in return. Lastly, peer-to-peer lending involves people lending money temporarily with the goal of one day getting their money back.
Kickstarter, Go Fund Me, and LendingClub are examples of crowdfunding websites that are commonly used today by startups, individuals, and organizations. If your crowdfunding campaign doesn’t kick off right from the start, sharing your campaign via social media can help get the ball rolling.
Make lifestyle changes.
Although there’s no harm in trying to get funding outside of your pocket to start your business, sometimes you have to look at your own personal finances. Is there something you can do to improve your current financial situation, so you can set aside money for starting your own business?
Even if you think there’s no way you’ll be able to contribute out of pocket, some lifestyle changes might make that possible. Start by thinking where your money is currently going to specific bills, outstanding debt, road trips, and vacations, necessities (e.g., groceries), personal spending, and so on.
Is there anything you can give up temporarily (or permanently) if it means you can accumulate more money to put into your business? Perhaps cutting off cable, kissing your annual vacation goodbye, or eating at home more are some ways you can save more moola for starting your own business.
Find a business partner.
Not every prospective business owner wants to have a partner in crime who will be part owner of their business. However, it’s still a great option to consider, especially if your future business isn’t necessarily the most affordable to start up.
When you find a potential business partner, they not only will be receiving a chunk of the profit the business brings in, but the idea is that they will also be contributing financially to the business in the process. Having them contribute, especially in the beginning stages of your business, can help tremendously.
Before considering letting just anyone be your business partner, it’s important that you thoroughly know and trust this person. Perhaps an old friend, a close family member, or a current business owner who you’re well-acquainted with would make a great business partner.
Other things that make a good business partner include someone who’s good with finances, has a creative streak, is willing to take risks without going off the deep end, and who’s versatile and open-minded. Most importantly, a potential business partner should have your best interests in mind and be on the same page as you initially.
Get a financial partner.
If you can’t find a business partner, don’t want a business partner, or can’t rely on your current business partner to provide the remainder of the funding you need to start your business, a financial partner can be a great person to turn to.
While it’s not always easy to find business financing that fits your business perfectly, the right financial partner can essentially be a gift from above. Many people find that they’re able to get the funding they need from a financial partner that they weren’t able to get elsewhere, such as from a bank.
But how do you know you need a financial partner? If the costs to start your business will be atrocious, or if you can’t afford to buy equipment for your business, a financial partner can be a big help.
Besides the latter, current businesses can also benefit from a financial partner if, say, they require debt refinancing, appraisals, or revolver credit. Generally, you can count on a financial partnership to serve your business well whether you’re in the early stages of starting your business or are near the end of your business, dealing with bankruptcy.
Turn to family and friends for help.
This item is last on this list for a reason: many people find that asking family members or friends for financial help is a last resort option. Some may even find this option embarrassing. In a worst-case scenario, asking family or friends for assistance in funding your business can damper your relationship with such people.
For instance, some of your loved ones may feel like they’re being taken advantage of and deny helping you. Other loved ones may become resentful the longer it takes you to pay them back. And from your perspective, if a loved one offers to only let you borrow if you pay them back a hefty interest, you may be the one left feeling angry.
The latter is not uncommon; when you borrow money from people you know, there are fewer strings attached. You feel more comfortable with lenders who you know personally. In turn, lending money seems more lenient. However, it’s important to treat loved ones lending money to you like any other professional lender to keep everyone happy.
Before asking family and friends for financial help, make a clear contract with all of the terms and when payments will be paid back, and have them sign at the bottom of the contract as evidence that they agree with the terms. Perhaps even give your lenders a percentage of your business profit for the first so many years as a way to say thank you.
The bigger the business, the more money it takes to start it up. As expected, this can be stressful for many people wanting to start a business. Many business owners already struggle to keep their heads above water financially, so why open a business starting off on a bad financial foot when you have the opportunity to receive the funding you need?
The seven latter ways to get funding to start up your business are excellent in not only making your dream become a reality but increasing your chances of staying in business long as such methods of funding don’t require that you fork your hard-earned cash out of pocket from the get-go.