So, you have a great idea, and you did the research and planning needed to get your startup off the ground, but you run into a problem of funding: the need for funding. If you have incomplete steps mentioned previously, finish them before you even think about securing funding, because no investor will take you seriously. There are many available funding options, and you should go for the one that matches your goals and business model. Are you interested in learning about the different options to take? Here are five key funding options for you to consider.
Funding Options
1. Crowdfunding
Crowdfunding is a funding option that works best when based around the launch of a specific product, which means it can both be a blessing and a curse. It is likely to be your business’s first attempt at getting all parts of the supply chain right, and the nature of crowdfunding means you have many orders to fulfill. However, if you have an innovative and original idea, then crowdfunding websites are brilliant ways to announce your new home business and get your ideas across. In addition, they give your products boosts through social media. Assess your goals and think about whether crowdfunding suits your model and what you want to achieve. Initial success does not guarantee future success, but crowdfunding will give you access to cash and visibility.
2. Rental Income
Aside from the more traditional funding options, consider using investments to fund your business. This creates a more sustainable way of generating funds that you can rely on. You will also have the comfort of knowing that you do not need to borrow the money. Rental income is a great way to invest your cash and gain a return. If you do not have funds to buy a whole property, or if you do not want the hassle of managing a property, you have the option of buying shares. You then receive a portion of the rental income each month. It is also far easier than buying a single property. Simply browse properties on a website, choose one that suits your needs, buy shares, and then wait for the income.
3. Friends and Family
Borrowing capital from people you trust is always an option. However, emphasize the word trust, and conduct the process formally. Ensure you have everything written down and signed by both parties, so any disputes do not arise later. You may have friends since childhood, but when money is involved and the terms are not clear, you run the risk of losing friends. Show your plans to family members and friends, and explain what they gain from your startup other than a financial return. This is good practice at honing your selling skills and your ability to present your vision.
4. Grants
Start researching the possibility of securing grants immediately. Grants are money given to businesses to help with startup costs, and they usually do not require repayment. Inquire at your local governmental building or any government website to see if you are eligible. Think about your own background and what criteria you fit into, because there are many different grants available. These are available especially if you come from certain backgrounds such as low income or a minority ethnicity. Do not ignore this possibility, and apply for everything. Remember: They can only say yes or no.
5. Funding with Bank Loans
A bank loan is a more traditional way to raise money for a business. Before you approach your bank, ensure that you have done proper planning, as the bank wants to see that your business is viable. Assess your financial situation and needs, and calculate how much money you need to borrow. The bank wants to know it will get its capital back, so any form of planning and projections persuade them that you are capable of creating a successful business. You pay interest when you repay your loans, but if you do not feel comfortable approaching friends and family, this is a viable option.
