Are you trying to get funding for your business, but aren’t sure where to begin?
When it comes to starting a new business, one of the biggest hurdles is getting funding. In fact, one study found that when people open a new business, 66.3 percent of their funding comes from personal finance, and 27.6 percent comes from income from another job. But, what if you don’t have enough personal finances or income from another job?
Keep reading to discover the key ways to get entrepreneurial funding for your business.
The first way you can fund your business venture is through bootstrapping. The idea of bootstrapping is that you scrape together any personal funds you can find.
Now, you may not be able to fund 67 percent of your business through bootstrapping, but you should contribute as much of your personal finances as possible. If you’re nervous about contributing your personal finances to your new business, then you may need to rethink how confident you are in your business model.
2. Friends and Family
Yes, it can be awkward to ask friends and family for money, but if you approach it the right way, it can work.
When approaching friends and family, it’s very important that you make it clear that you’re not just “borrowing” money to start your business that they’ll definitely get back. Your friends and family members need to understand that you’re approaching them as investors. Therefore, you’re friends and family are investing in your business, not in you.
Crowdfunding is a great option for the early stages of business, as it allows for a wider pool of investors to help fund your business with fewer restrictions.
This is also a great option for those who don’t qualify for a bank loan or those who aren’t quite ready for approaching angel investors or venture capitalists. Some of the top crowdfunding sites include:
- Crowd Supply
4. Angel Investors
Once your business starts to reach new levels of growth, it’s a good idea to approach angel investors for more funding.
An angel investor is an affluent individual (or group of individuals) who provides money for a business usually in exchange for ownership equity, or sometimes, convertible debt.
You can find angel investment groups in most communities as well as on the internet. When approaching angel investors, you need to be extremely prepared to pitch your business’ growth plan- think Shark Tank!
5. Bank Loans/Venture Capital
Another option for business funding is to take out a bank loan. In order to secure a loan from a bank, you will need to present several years of financial information both as an individual and as a business owner.
They’ll also ask for collateral to secure and guarantee the loan. This collateral may be a house, vehicle, or some other object of value.
Are You Ready to Start Your Entrepreneurial Funding Adventure?
Now that you know the different ways you can get entrepreneurial funding, it’s time to get started on your adventure!
Also, be sure to check back in with our blog for more financing tips and tricks.