Ways to Finance Your Startup

Are you considering establishing your own business? Although you may have great ideas for your business, this dream can only become possible when you make it a reality. This involves having sufficient money to fund your business. If you do not have enough savings for your startup, then do not worry. There are numerous ways that you can alternatively finance your business.

Angel Financing

If this is the first business that you have started, then you may be unfamiliar with some of the most common ways to get funding. One of these methods includes angel financing, which is when an investor funds the beginning of your startup in exchange for convertible debt or part of the business equity. An angel investor typically offers anywhere from $20,000 to over $100,000, depending on your business idea. Investors usually will be more inclined to invest in a business when the plan is well thought out, and the market is ready for such a business. An angel investor will also want to ensure that they get a reasonable amount out of this investment. Most investors will agree to invest in your business in return for 20%-25% of the money from your business. If you are considering using angel financing in your startup, there are many websites that you can use to find an angel financer, such as on AngelList.

Crowdfunding

Another way to finance your startup can be by crowdfunding, which is when many people contribute a small amount to make a larger amount. This most commonly can be done through websites or social media. To make a crowdfunding campaign, you should establish how you want to create it. If you decide to have it on your website, you should create a separate tab page that includes all the details. If you want to use social media, try creating a video and providing your details in your profile bio. Videos can reach many audiences in so many various areas. You should have a captivating story about your business and ambitions to get the most success from your video. Ensure that you provide your donation link somewhere that is visible for your audience to see. Depending on how high some donations are, you may decide to offer a discount on their next purchase or service from your business. Not only does crowdfunding provide you with sufficient funds to start your business, yet it also offers a great way of advertising.

Business Loan

A typical option for business startups includes getting a business loan between yourself and a bank or private lender. You can borrow anywhere from $5,000 to $500,000. In some cases, you may be able to get a loan of up to $1,000,000, yet this is rare, especially if you are beginning your business. A bank or private lender may be equally reasonable to get a loan from. It all will come down to your credit score and your financial situation. After going through the application process and getting approved, the loan process can take anywhere from one to three months. Providing all your income and financial documents in a timely fashion will allow the process to move along quickly. If you are looking for a more traditional way to finance your business, this may be an excellent option.

Business Incubators

Another investment program you can get your funds from is a business incubator. An incubator is a program that gives early-developed business founders mentorship and training. This can assist you in getting established through your startup. In some cases, they offer investments between $10,000 and $50,000. It can be more challenging to receive funds through an incubator, so you may need to do your research into some that are in your area. An incubator will fund a business when they see a strategic plan. If you are looking for a program that can offer funding and coaching, make sure to find an incubator.

If you want to finance your startup effectively, choose one funding or investment option listed above. Although it can be challenging to begin a business in today’s economy, with the proper program assistance, you can make your business idea into your dream business.

Sources

-Harroch, Richard. D. Sullivan, Mike (2019). Startup Financing: 5 Key Funding Options For Your Company. Forbes. Retrieved from 

https://www.forbes.com/sites/allbusiness/2019/12/22/startup-financing-key-options/?sh=4c7aa47d2a84