When it comes time for you to go to work for yourself, every venture you enter will be a start-up business. For a lot of entrepreneurs, the notion of starting their own business built around their ideas and innovations often sits at the top of their bucket lists. Indeed, it is a very exciting time in their life.
Of course, it would be misleading to not mention how difficult is it to venture into a start-up business. It takes a lot of blood, sweat, and tears to get a new business off the ground and guide it towards success. Regardless of the effort that 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 are going to 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 that has been provided by others who have been there and done that. To that end, here are five ways to fund your start-up business.
Perhaps, you have heard of business platforms like Kickstarter or Indiegogo. If not, you might want to look into them and how they can help create funding for your start-up business venture. In the meantime, here is a little information about how these kinds of funding platforms work.
The process would start with you posting information about your business idea or ventures. You would then post your funding goal, that being the amount of money you feel 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 to be effective, that tends to apply only to certain ventures. That would be business ventures that have a good story with a good business idea behind them.
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 really solid benefits.
First, you can start building a strong business credit profile. You can do that by actively using your business credit cards while making all of your payments on time. Many astute accountants from a small business accounting firm would tell you as much.
Second, a business credit card allows you secure funds on an as-needed basis. That translates to you only having to incur debt when absolutely necessary. The interest savings alone would make a big difference for your business.
Finally, having business credit cards will allow you to keep your business and personal expenses separate. This is something your small business accounting firm and its employees will appreciate when providing business accounting services.
3. Securing a Small Business Loan for a Start-up Business
The Small Business Administration (SA) exists in order to help facilitate the lending efforts of business lenders. The goal is to make sure entrepreneurs can get access to funds to help start and grow their businesses.
The type of small business loan you would want to target would depend a great deal on the industry related to your venture. It would also depend on the amount you want/need to secure. As an example, a microloan is a small business loan that is intended for business owners who need $50k or less in funding.
No matter how big or small your business need might be, the is a good chance the SBA will be able to assist you. Of course, it is debt, and you would be faced with interest changes and monthly payment requirements.
4. Venture Capitalist
If your business idea is strong and your funding needs are large enough, you might want to speak with a venture capitalist group. 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.
The best benefit you could derive from this option besides the money would be the chance to work with a mentor. The mentor would participate in the decision-making process as a means of offering 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 with one major difference. Angel investors usually want a good chunk of the company’s profits. They are not as interested in being involved in the decision-making process 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 offer our thoughts on how you might fund your business.