Investing a capital in business is as important as investing your time and efforts into it. Funding is required at every stage right from starting the business to marketing, scaling and upgrading the product or service. But what are those resources which will help you get funding for your business?
You may be in the stage where you don’t know where to get started from or you don’t feel like you know the right people in your life to actually help support you and maybe lend some money to build first prototype. But not to worry anymore.
In this article let’s discuss about 7 different ways to get funding and how to correctly approach investors for your funding.
7 different ways to fund your online business
- Bank or credit cards. Many people think that they need to get an investor involved in their business to start. But if you are a credible person and you haven’t like cratered your credit score or relationship with your banker then you should be able to go to the bank and borrow some money.
Some of the best companies, Airbnb, Joe and Brian talked about how they applied for all these different credit cards at the exact same time and used that for funding to start Airbnb.
- Trade equity. You can trade both equity in the business that is, the value of the business or a piece of business and sweat equity. A lot of you guys might have job and people usually think that they need to quit their job to start the business. But that’s not the case.
Try to get your new business to at least 60 to 70% of your current income and then make the swap. So trade equity either you can hire services or professionals and give equity to get them involved in your business to help fund things.
- Startup accelerators. In most of the metro cities you probably have a startup accelerator that’s willing to give you a particular capital to seed and incubate your idea. So if you’re a startup then you just need to go through the application process. Many of the accelerators have a lack of entrepreneurs coming to them with viable ideas, like they don’t have enough applicants that are serious and motivated and have something worth building.
So your idea presented in a super compelling way and with a lot of passion and commitment is probably going to get you in there and get some of that funding.
- Venture capitalists and professional investors. VCs are the people that manage funds, so they actually go out and raise their own money. You’re raising money from them and they do the same exercise and raise funds from limited partners. VCs have to make the decision on who they give money to because they need to generate return over a 10 year period.
There are thousands of VCs in the world and they’re looking for the entrepreneurs. So VCs are the great source. Many times customers can’t afford to pay their bills in one go. Thus, many of businesses has started providing consumer financing to their customers which will help you increase sales while competing with other businesses out there.
If you want your sales to reach hikes overnight, you will have to provide flexible payments options to your consumers. But you will need a good capital for consumer financing, right?
Here, venture capitalists and professional investors can help you well, as they understand the importance of consumer financing. They can provide you fundings at times required which will maintain a particular capital into your business.
- Local angels. So in almost every community you have angel groups. These are people that own real estate, they own car dealerships, they may own really profitable high revenue business. They want diversify a bit and get involved with young, eager and fun companies. So they’re part of these angel groups. Maybe on quarterly basis they have a meeting where you can come in and pitch and raise money that way.
- Crowd funding. The cost of failure is going to go to zero because crowd funding has leveled the playing field for market validation before you build anything.
Not only crowd funding is incredible source of capital to start the company but it’s also a beautiful way of testing if there’s a need, if there’s people out there who actually want to buy what you’re going to build or sell.
There tons of different crowd funding platforms. But at the end of the day, it’s 20% video and the page itself and the story you write about your project, your software project and real 80% about marketing and distribution.
They’re not going to get you the project funded instead you’re going to have to do some work, email, blogging and drum up a lot of interest in that crowd funding campaign.
- Friends and family. These are the people that know you the best, believe in your vision, and are willing to back you. Just be honest with them, just tell them, it’s high risk and I am going to make the best decision with the information that I have, but don’t give me money you wouldn’t be comfortable losing 100%.
That’s where things get a little diecy when people misalign expectations.
Altogther these 7 tips from going to the bank, using lines of credit, trading equity to help bring resources in or sweat equity to build the business, to use startup accelerators, to reach out to VCs and professional investors is actually super smart!
And finally, all of the best entrepreneurs never looked at capital as the primary challenge, they’ve always looked at being resourceful and these tips will definitely help you being resourceful.
Also don’t raise more money than you’re willing to lose. And even if you lose it, chalk it up as a learning. You’re investing in yourself, in your business not so much for financial outcome, but as an opportunity to learn.
Author Bio: Aline Huseby is a Sales & Marketing Manager at ChargeAfter. She would like to share content on Finance Industry like Point of Sales financing, Buy now Pay later, consumer financing & Ecommerce financing for valuable reader.