Launching a startup is a risky and stressful thing to do. Many people who try to get their business going don’t succeed in getting the whole process off the ground. To succeed in this goal, you have to live in the future and think ahead in order to get your business from one point to another. And the first important thing to do is find ways to finance your startup idea. In this article, we will talk about the 5 best ways you can earn funds for your new startup.
Crowdfunding
Crowdfunding is the most efficient method for raising a starting capital through the collective efforts of the people in your environment, potential customers and business investors. Online crowdfunding is a great way to raise money because you are tapping into a large pool via crowdfunding platforms and social media. It provides you with a large number of advantages and offers you the chance to promote your product to a wide audience even before you launch it. You can offer your donators certain benefits in the form of a reward or equity:
- Reward – You can offer your backers custom incentives, exclusive preorder bonuses, free copies of the finished product, etc. These types of benefits are typically applied when you plan on raising less than $50k.
- Equity – If you have a business that will raise over $50k in donations, you can offer your backers equity stake in the company in exchange for their commitment.
Find a Venture Capitalist
A venture capitalist is an investor who will provide the starting budget for a startup, without having access to their equities. Venture capitalists are ready to take the risk if your business falls flat but will earn a massive return on their investment if your idea succeeds. They mostly look for opportunities in industries that are closely tied to theirs. So, if you’re looking for a venture capitalist to support your business, you will have the best chance for success if you look for one in an industry related to your product or service.
Get an Angel Investor
Similar to a venture capitalist, an angel investor is a business partner that provides financial support without demanding any access to your business equity. What makes the angel investor beneficial for entrepreneurs is the fact that unlike the venture capitalist, he or she can provide you with a one-time investment or ongoing budget injections that keep your business going. This form of funding is the ideal goal for every startup. Angel investors will give you the most favourable terms out of any lenders and investors since they invest in the business creator starting the business rather than into the viability of the business itself.
Use Your 401(k)
If you don’t like the prospect of borrowing money or getting a long-term investor for your business, you also have the possibility of cashing out your 401(k) and using it to finance your startup. This is still a risky move, but less risky since the only funds that are at stake are the ones you’ve put into your business. Cashing out also has a long-term impact on your savings, so take everything into consideration before deciding on this option. Alternatively, you can borrow from your 401(k) fun, just be ready to pay the taxes and early withdrawal fees.
Borrowing from Your Close Ones
If you’re short of a little money, you can also borrow some from your close circle. Though this isn’t exactly the most advisable thing to do, it can help you if you’re close to achieving your goal. When borrowing money from friends and family, it’s advisable to set firm deadlines and rules, so you don’t run into any unpleasantries that can taint your relationships with them. Set aside your feelings and create a firm repayment timeline, and if necessary put the loan into writing. This will give both you and the lender peace of mind knowing that you’ve separated the business part from the personal part of your relationship.
Matched Betting
This one is a little out there. But matched betting can provide a great way to make some quick cash whilst working from home. It works by locking in guaranteed profits from a sporting event, using signup offers from bookmakers. People that take part in matched betting typically earn between £500 – £1000 per month doing matched betting.
Summary
The financial climate is always changing and finding the ideal business model and a reliable financial partner can seem impossible. It’s important to stay persistent and dedicated to the goal of making your startup profitable. You can find more advice online* which can help you develop a more successful strategy and make your business successful.
*Reference:
http://www.prowess.org.uk/starting-a-business-with-no-money
