A GAME OF NUMBERS
Coming up with a new business idea is easy – anyone can do that. Pick any person at random from acrowd and they will spill a thousand unique plans for business startups. But if such is the case, then whyare so many of us still slaves of the 9-to-5 routine? And why isn’t every other person rolling in money earned from their ventures? That’s because not everyone is willing to make the effort and above all, take financial risks.
Running a business is no child’s play. It’s not your average day job and requires a lot of sacrifices. Youhave to think long-term, especially when it comes to the finances. In its true essence, finance is just a game of making the most of your monetary resources. Petyr Baelish, the antagonist of George R.R. Martin’s “A Song of Ice and Fire” series explains this brilliantly: “They’re only numbers – numbers on paper. Once you understand them, it’s easy to make them behave!”
HOW TO GET FINANCED
A major challenge that stands between you and your dream of entrepreneurship is finding ways to finance yourself. Luckily for you, you don’t necessarily have to slave away to save money for your business startup. There are some incredibly easy ways to get your hands on capital to kick-start things and we are about to share with you the 15 ways that top the list and are recommended by experts.
1. Apply for a bank loan
Getting a bank loan is difficult, but only if you do not have a good credit score. And how much of a score is “good?” The answer is, above 650. So, if you have been punctual with your taxes and loan repayments, then apply away without giving it a second thought. There are many banks in the US that issue small loans for business startups. So, do some research and make a list of potential banks from where you can obtain loans. Then, narrow down your options and make visits to each to discuss everything in detail.
2. Business credit cards to the rescue!
Business credit cards are a great way to quickly get things started. You can easily get your hands on them and start using them right away. The best part is that the minimum payments for this option are extremely low. So, if you do not have much capital to begin with or a steady flow of income, then using credit cards for making transactions for your business startup will definitely work for you. Just make sure that you do not miss out on any payments. Also, don’t just stick to paying the minimum amount; in this way, you can save yourself from having to pay a large amount of interest.
3. Venture capitalists are your friends
Venture capitalists are the sharks belonging to different industries who are willing to make investments in promising ventures. However, your business should already be in existence and well past the concept stage. If it is truly unique and has a chance of making it big in the future, then venture capitalists will be more than willing to finance you. You need to be able to present yourself and your idea in the best way possible because if they like your idea and decide to make the investment, you can have yourself a mountain’s worth of money to grow your business.
4. Consider online lending and peer-to-peer
There are many online options where you can get funding from. On platforms like OnDeck, PayLater, Kabbage, etc., you can obtain a loan of up to $500,000 within one business day! This option is great for those who are unable to obtain bank loans for any reason whatsoever. You can also opt for peer-to-peer lending. The application process is much easier than traditional bank loans and it gives you quick access to money. Moreover, the amount of funding has risen over the years, as this method of financing has become extremely popular. Upstart, Prosper Marketplace, Peer form, CircleBack Lending, and Lending Club are some of the many reliable online platforms where you can easily apply for P2P loans and kick-start your business startup.
5. Angel investors – A sight for sore eyes
Angel investors are exactly what the name suggests. They come as angels in times of need and distress to finance your business. An angel investor can invest anywhere from $10,000 to $1 Million, depending on their budget and the long-term benefits of investing in your venture. However, you need to do some homework if you want to attract these investors. First of all, make sure you present your idea in the best way possible on different platforms. Plan your business accordingly, state your vision, and explain in detail how you are going to make it a reality. If your business idea sounds promising enough, angel investors will be lining up to finance your startup!
6. Ask your family and friends
Even if the whole world knocks you down, your family and true friends will always be there for you to pick you up. So, why wouldn’t you consider asking them to invest and become business partners? Approach them how you would approach a stranger who is a potential investor and pitch your million-dollar idea. Identify the benefits they would enjoy after making the investment and put them out in the open. The best part is that they can offer you great relaxation in repayments and there is also a level of trust that isn’t present when you are dealing with strangers and financial institutions. So, talk to your loved ones, but be professional while presenting your idea.
Online platforms like Kickstarter and Indiegogo have allowed aspiring entrepreneurs to get instant funding. Like all platforms, you need to have a great idea to begin with so that investors are attracted to your venture. Crowdfunding works by accumulating small amounts of money from a huge number of people to obtain the capital for your new business. The platform you use will get a fixed percentage of the funding you obtain. It also provides you with insights into your business idea, allowing you to make changes that will click with the market. So, visit one of these platforms, sign up, and start attracting investors today.
8. Get an SBA loan
Getting a Small Business Association (SBA) loan is another great way to finance your small business. They offer incredibly flexible terms and extremely low interest rates. Because of these reasons, getting an SBA-backed loan is also very difficult. Do a little homework beforehand and find out if your venture can be considered a “small business” to begin with. They are guaranteed by the federal agency and can land you a funding of up to $150,000 or more. You also get much longer terms than you would with non-SBA loans.
9. Get a microloan
If you do not require a large amount of capital to start your business, then applying for a microloan might just work for you. Microloans are significantly easier and faster to obtain. They usually do not exceed $50,000. Another major benefit is that you do not have to worry yourself over extensive documentation, unlike normal bank loans. Microloans are obtained from either the SBA, special lenders known as “micro-lenders” or nonprofit organizations. But, is a microloan worth it? It all depends on your requirements. For example, if your venture initially doesn’t require you to buy expensive assets and rent out a physical space, then getting a microloan is your best bet.
10. Get federal grants
If your idea revolves around research and scientific fields, then consider going for federal grants. If the plan is truly innovative and you believe that it has the potential to change the world for good, then you might be eligible for this grant. These federal grants are granted by the Small Business Association through the Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (SBTT) programs. However, there is a drawback which all fellow inventors and scientists try to avoid at all costs: sharing your idea. You will have to provide all the crucial details of your plan and that includes all your secrets as well.
11. Participate in a grant contest
Many aspiring entrepreneurs participate in different grant contests to obtain funding. For example, FedEx arranges an annual Small Business Grant contest in which the winner gets a prize money of $25,000. Competition is tough and your idea must be truly exceptional if you want to win this contest. The money isn’t that much, but it’s better than nothing and enough for you to kick-start your business and get things in order. So, take part in contests like these and show the world what you are made of.
12. Do not resign from your day job
It’s totally understandable that you cannot wait to quit your day job and embrace the entrepreneurial life, but don’t get carried away by your emotions. Do not send that resignation email unless and until your business startup is up and running and already generating a substantial income. Sure, you will have to sacrifice a lot of sleep and quality time with your family and friends, but at least you will have a steady flow of income. Remember, you also have personal bills to pay and a stomach to fill. Plus, you can set aside a fixed amount of savings from your monthly salary and start accumulating capital for your startup
13. Sell something
If you have an old car that you hardly use, an expensive watch given to you as a gift or bonds that you bought many years ago, consider selling them. You have to realize that you have to get your hands on money fast if you want to kick-start your business before someone else does the same. So, if you have any personal belongings that you think might have great value or just enough to fund you initially, sell them immediately. Antique items can sell for a handsome amount. Don’t let your emotions get in between you and your dreams - let go of these items that you may be attached to and gain something bigger and better.
14. Feeling confident? Pledge future earnings!
This is a risky move. Before even thinking about it, it’s best that you consider all of the risks. You have the option to pledge a fixed percentage of your future savings in exchange for money that you can get right away. For example, if you pledge 10% of your future savings, you will be eligible to get $100,000 right away – Just enough to start a decent business. Again, while this method of financing sounds attractive, there are many legal issues to consider and mountains of risk to climb. Only go for this option if you are 100% confident about your business idea and feel that it will be generating a truly steady flow of income in the years to come. If it doesn’t, you will end up losing a good percentage of your future money and might even have to pay from your own pocket.
15. Take up a part-time job
If your day job and/or side business are barely generating enough money for you to pay your bills and other expenses, then consider taking up a part-time job. There are numerous opportunities for you to explore yourself and make use of your skills. Become a freelance photographer and wow your clients with your breathtaking clicks. Or if you enjoy driving, then consider becoming an Uber driver. Or maybe you are into art, in which case you can take up commissions for sketches and painting. The point is that there are many side gigs out there. Platforms like Fiver and Freelancer can help you find clients and generate income easily.
Considering the vast array of options to finance your startup, the idea of starting up your new business suddenly seems like a reality. Do some research, narrow down your options, and select the ones that best suit your requirements. Best of luck!