One of the biggest challenges for upcoming entrepreneurs and startups is financing. Every business requires adequate financing, and it’s not always easy to source startup capital. Although most people consider using their personal savings or asking for a loan from friends and relatives, there are more convenient ways to raise capital. Read on to find out what they are.
Stock Loans
This one may come as a surprise. If you own some securities such as shares, you can use them to borrow money.
In most cases, people sell their shares to raise enough capital to invest in their businesses. Selling your securities is not the best move. You will be losing your shares at the expense of funding a venture that you are not sure will give you the right returns.
Instead, one of the wisest things to do is use your shares to take out a loan. Such a move ensures you retain your shares and, at the same time, get the money you need to finance your business. Check out easystockloans.com to learn more about stock loans.
Angel Investing
This form of outside funding normally appeals to businesses that require large amounts of money. Angel Investors are wealthy and well-established professionals with an interest in your business idea. Such investors are usually ready to finance your ongoing venture or innovation — if they find your idea promising enough.
For instance, if you have a promising discovery that could take the market by storm, the Angel Investor will look at the viability of your idea. Most likely, they will assess the financial wisdom of investing in your idea. When they decide to finance, it’s a good sign that you’ve got a promising innovation.
For this financing option, you need to approach Angel Investor communities in your area. Set up meetings to present your business idea. You might be surprised by the enthusiasm you receive.
Entrepreneurial Contests
This might sound like a gamble, but many people have made it as entrepreneurs through winning contests.
If you believe you have what it takes to be a successful businessperson, register for various contests. This will allow you to showcase your business module. You also gain more skills by competing with others.
Even if you don’t win the overall prize, you might get the right connections to start your venture. You also will learn how to create and present a detailed and comprehensive business plan. This might help you to attract potential Angel Investors.
Government Funding Programs
Government programs exist that provide capital for startups. All you need to do is present a detailed business plan to the grant committee. Once the plan is reviewed and approved, you will receive the funds to start your venture.
The good thing about government funding is that it’s usually substantial. You will have surplus capital at zero or very marginal interest rates.
Invoice Advances/ Factoring
Let’s say you’ve already billed out some of your customers but need cash to keep your business running. You can use these invoices to get an advance.
Customers can take longer to clear their bills, which can make your business run out of cash. However, you can get your service providers to front you some money to keep you afloat. Ensure you keep records because invoice factoring can be a confusing process.
Day Jobs or Side Hustles
Any startup needs time to grow and self-finance. Before your business takes off and becomes well established, you need an extra source of funding in the short term. A part-time job or a side hustle like driving a taxi might be just enough to keep your business going.
Final Thoughts
There are many financing avenues you can pursue. All you need is the right plan to ensure your business does well to pay off your loans and keep afloat.
