Did you know that there are over 30 million small businesses in the USA today?
These all exist because they had a successful start. No, it’s not only the idea or the appeal that people have in their concept that made them successful. All these businesses exist because they got proper funding from the get-go.
If you want to be like them, you’ll need to find the right sources of funding for your business. How do you fund a small business, then? Read on to learn the best ways to fund your business idea and turn it into a reality.
If you’re looking for modern funding solutions, crowdfunding is the way to go. This includes platforms like GoFundMe or Kickstarter, which allows anyone to pitch ideas. These platforms have become among the most popular means of funding since anyone can find success here.
The only thing you must worry about when using crowdfunding is the pitch. These platforms allow you to write a short description of your idea or upload a small video. You can then demonstrate what your idea does or what it aims to do.
If it appeals to the people who browse, you can be sure that they’ll donate to your profile on the platform. What’s great about this method of funding is that you get to keep all the money you make through donations. The only drawback is that it’s almost impossible for niche business ideas to find success here.
A great way to ensure funding is by approaching an angel investor. Angel investors are those who are looking for great investment opportunities. You only need to approach them and give your pitch to get funding. If they like what they hear, they will fund you and leave you to it.
The only thing they ask in return is equity in your company. This means that you will often have to sign a contract if you want everything to be in order with your investor.
The only problem with relying on donations for funding is that you can’t be sure you’ll get all the funding you need. Funding a small business means that you need all the resources you can get to launch and sustain it.
Another method of funding is to look for venture capitalists. Venture capitalists are like angel investors. They will ask for a share of your company in exchange for funding.
Unlike angel investors, though, they are more likely to invest in your pitch. They invest in any project pitched to them as long as they think it has growth potential.
Unlike angel investors, they also want to have more of a voice in the company. They’re like silent partners who will help with the direction of the business. This is what most people think is the best way to manage a business as it relieves some stress from management.
This is a great way to fund your business if you want to have all the control or sole propriety.
This is risky, though, as it means that you’re putting all your eggs in one basket. If you fail your business venture, you’re likely to go bankrupt. You will need a foolproof business structure if you want this to succeed.
You can also ask for funding from your friends and family. This is a good way to reduce the risk of your venture making your bankrupt along the line.
You can also get bank loans if you want to secure funding for your business. This is a great way to ensure that you get the resources you need as banks will give you what you need. The only thing that they ask of you is proof of income.
You need to ensure that their investment will not go to waste. For this, you’ll need your pitch to be impressive enough to convince them. It’s also important to make sure that you will deliver on your pitch.
Businesses who can’t pay off loans to the bank often get shut down and their possessions are taken as collateral. This is often because they can’t keep up with the interests of the loans. This is among the reasons for 20% of businesses to fail in the first year.
To avoid this, make sure that you can secure customers and income before applying for a loan. Doing some research on what your expected income from clients interested in your field is a great way to estimate whether you can afford a loan.
Small Business Administration
The problem with bank loans is that they will turn away some loan applications. This is because they think the business isn’t likely to succeed at all. A great way to get them on board is to get the SBA involved.
The Small Business Administration will ensure that the bank gets paid no matter what. If the business can’t pay up, the SBA will handle the payments for it. This way, you can secure a loan even with a strange business idea in mind.
You need not worry about paying the SBA, too. They often give you lots of time to gather the funds needed to pay them back. Interest isn’t an issue, either, since they put a cap on their interest rates.
If you think other institutions and organizations can help fund you, it’s best to get a microloan from them. This works well if your business idea appeals to their interests.
Educational institutions like universities are great sources for microloans. If a school doesn’t give you one, you can approach different departments, instead.
Learn How to Fund a Small Business Today
Do you want to turn your business idea into a reality? The best way is to find funds to build on your idea! Use our guide and find the right way to fund a small business for yourself today!
Are you looking for someone to help you with startup loans, credit repair, or funding? Contact us and we’ll get in touch with you as soon as we can!