When it comes time for you to go to work for yourself, every venture you enter will be a start-up business. For many entrepreneurs, starting a company built around their ideas and innovations often sits at the top of their bucket lists. Indeed, it is a fascinating time in their life.
Of course, it would be misleading, not to mention how difficult it is to venture into a start-up business. Getting a new business and guiding it toward success takes a lot of blood, sweat, and tears. Regardless of the effort it might take, hard work is the only path to building a successful business.
As you contemplate moving forward with your start-up business venture, there will be a lot of things on which you will need to focus. Chief among those things will be figuring out where you will get adequate funding. You will need funding to get things going and keep things going until the profits start rolling in the front door.
Given the challenges you could face when looking for funding, you might benefit from the information provided by others who have been there and done that. To that end, here are five ways to fund your start-up business.
1. Crowdfunding
Perhaps you have heard of business platforms like Kickstarter or Indiegogo. If not, you might look into how they can help create funding for your start-up business venture. In the meantime, here is some information about how these funding platforms work.
The process would start with you posting information about your business idea or venture. You then post your funding goal and the money you need to raise. From there, people who support your idea can make donations, pledge to purchase a certain amount of your goods or services, or agree to provide funding in exchange for some future.
While this option has proven effective, it tends to apply only to certain ventures—those with a good story and a good business idea.
2. Business Credit Cards
From a convenience standpoint, business credit cards might be the easiest way to secure funding for your start-up business venture. While it might seem strange to see someone recommend going into debt right out of the box, having business credit cards with a revolving line of credit offers some solid benefits.
First, you can start building a solid business credit profile. You can do that by using your business credit cards while making all your payments on time. Many astute small business accounting firm accountants would tell you as much.
Second, a business credit card allows you to secure funds as needed. That translates to you only incurring debt when necessary. The interest savings alone would make a big difference for your business.
Finally, having business credit cards will allow you to separate your business and personal expenses. Your small business accounting firm and its employees will appreciate this when providing business accounting services.
3. Securing a Small Business Loan for a Start-up Business
The Small Business Administration (SA) facilitates business lender lending efforts. Its goal is to ensure entrepreneurs have access to funds to help start and grow their businesses.
The type of small business loan you would want to target would depend significantly on the industry related to your venture. It would also depend on the amount you want/need to secure. For example, a microloan is a small business loan intended for business owners who need $50k or less in funding.
No matter how big or small your business needs might be, there is a good chance the SBA can assist you. Of course, it is debt, and you would be faced with interest changes and monthly payment requirements.
4. Venture Capitalist
You might want to speak with a venture capitalist group if your business idea is strong and your funding needs are large enough. These are groups of investors with deep pockets and a good eye for sound investments. If your idea has substance, this could be a good option. However, you might have to share a little control over the direction of the business.
Besides the money, the best benefit you could derive from this option would be the chance to work with a mentor. The mentor would participate in the decision-making process and offer you guidance.
5. Angel Investor
Angel investor is a term that people in the business funding community use to describe a small investor or group of investors. These are investors who have ready capital available to invest in businesses. Angel investors are much like venture capitalists, but there is one significant difference. Angel investors usually want a good chunk of the company’s profits. They are not as interested in being involved in decision-making as they are in getting a solid Return on Investment (ROI). It is not unheard of for angel investors to seek close to 50% of the profits.
There you have it—five solid suggestions on how you can fund your start-up business venture. If you would need a small business accounting firm, you should give us a call. We would be happy to discuss our services and suggest how you might fund your business.