You have a dream, you have a plan and you’re confident in the eventual success of your potential business, but ideas don’t ensure money, unfortunately. In order to start your business, you’ll need some sort of funding.
Here’s what you need to do in order to secure funding for your startup business.
Draw up an Official Business Plan
Even if you’ve developed a general outline of your business, whether in your head or on paper, you need to develop it further with exact details explaining your market strategy and operations, as well as some detailed information of your financial projections.
The exact things to include in a business plan vary by investor and market field, but there are some things that you should include by default, such as:
- Business Summary
- Description of Business
- Any Services or Products Being Offered
- A Market Analysis of Your Industry
- Your Own Market Strategy
- How You Will Organize and Manage the Various Parts
- Financial Information and Projections
Once you’ve put together this much more comprehensive document, you can use this to persuade investors and lenders to invest in your idea. Even if you’re not looking at investors, having this plan written down will help you to keep your business on track in the long run, and you can refer to it later and use it as a guidance tool.
Visit a Bank That You Have a Relationship With
If you already have an account at a bank, whether a checking, savings or investment account, approach them first. Meet with someone who is in charge of lending and discuss your business plan with them. Pitch them an investment amount and explain how it will be used.
If you can’t get a small business loan, look into other lines of credit. If you own a home, and you’re willing to risk your house on your business’s success, look into a home equity loan, or if you are put off by such a large risk, maybe look into a title loan instead as a way to get a plentiful loan while reducing your potential losses.
Look into Venture Capital
Venture Capitalists are investors who are interested in funding the beginnings of a company in exchange for shares of ownership or equity. It’s a trade-off between being a full owner of your business with receiving funding to get things off the ground.
Crowdfunding for Your Startup
Crowdfunding has become a very popular way to get a business idea funded, as it allows you to get funded quickly, it shows a large base of consumer support, and it allows you to remain in control of your business.
However, getting a crowdfunded business to take off is a bit of a gamble. It’s like trying to make a viral video on purpose, and the odds are not in your favor. Consider using this as a supplement or a fallback to other forms of funding.
Can You Fund Your Startup with Your Personal Savings?
If you have the money on hand already in your savings account, consider using it for this. Because it isn’t a loan, you won’t have to pay interest on this. You also maintain sole ownership if you can fund your business this way.
However, betting your life’s savings on your business’s success isn’t the safest bet. Many businesses fail, and if yours fails before you’ve recouped your investment, you’re out of that money. If you have an investor and your business fails, you’re out of their money. Sometimes it may seem like a better deal to risk someone else’s money, and if you’re willing to risk theirs instead of yours for the cost of shared ownership, this may be a better alternative for you.