6 Ways to Get Funding for Your Business Idea
By Derek Lotts, Contributor at Smooth Decorator blog
In order to start your own business, you first need a good business idea. However, even once you figure out what you want to do, you're still a long way from putting up that "open for business" sign. This is mostly the case because you need to obtain finances for getting your business off the ground. Unless you have enough money on your bank account, you'll need to think about the ways you can get funding for your business idea. And to help you, we came up with 6 of these that might be exactly what you're looking for.
Friends and family
Borrowing from friends and family is always an option, as they're the ones who should believe in your business idea. What's so great about loaning from friends and family is that, usually, there won't be any interest rates and all you'll need to do is return the money you've borrowed. The only problem with this way of funding is that it can hurt your relationships with friends and family. The subject of most disputes among friends and family is money, and if you don't manage to return the money on time, it can only start further arguments. In case you opt for this way of funding, make sure you're ready to return the favour when necessary.
If you don't have enough money to fund your idea, it doesn't mean there aren't other people out there who do. This means that another thing you can do is start looking for a business partner. Ideally, you'll be able to find someone who's fond of your business idea and can provide you with funding for it. Also, it might be a good idea to choose a business partner who already has experience in running a business. That way, they won't only be able to help you financially, but they'll also assist you when it comes to making important business decisions. Just don't forget that, if you opt for this route, choosing the right business partner is the key to success.
Another interesting option you might want to go for is turning to angel investors. In fact, some of the biggest companies out there, like Google and Costco, have started their ventures in the business world this way. Angel investors are individuals or groups who are looking for a higher rate of return than they'd get by more traditional investing. What's great about angel investors is that they know a lot about running a business and they'll be more willing to take a long-term view when investing in your business. Usually, they'll give you the money to get started in exchange for up to 25% return on their investment.
Applying for a loan is another great option for anyone looking to start their own business. The problem with bank loans is that they're sometimes almost impossible to obtain. Even if you do, chances are you won't get enough to turn your business idea into reality. That being said, turning to a company that can provide you with a loan is a much better idea. There are companies that offer online loans and applying for one really is a smart move. Of course, if you decide to get a loan, it's recommended that you start working on a plan for repaying it as soon as your new business is up and running.
If you've been paying attention, you've probably heard a lot about websites such as Kickstarter and Fundable. What sites like these do is help you present your business idea to people who might be interested in helping you get the funding for it. The reason why this works is because no one is required to make huge contributions in order to help you. Other people who use the website can make small donations and help you reach the goal you've set when you first joined and presented your idea. However, bear in mind that most websites you can start a crowdfunding campaign on won't let you keep the money if you don't reach your goal.
Many new entrepreneurs have got funding for their business idea through peer-to-peer loans and there's no reason why you shouldn't consider doing the same. Basically, peer-to-peer loans work this way - you present your business idea just like you'd have to do if you opted for crowdfunding and tried to attract potential investors. The difference is, with peer-to-peer loans you present your idea to other entrepreneurs out there who might be willing to borrow you the money. These people have been in the business world longer than you and if your idea is good, chances are they're going to recognize this and choose to help you out.
As much as we'd all like, there's no free money and starting a new business requires a lot of work and commitment, as you have to get your company's finances in order. Luckily, with so much funding options available, there's no reason why you shouldn't give running your own business a go.
Derek Lotts is a Sydney based writer and researcher, a regular contributor at Smooth Decorator blog. He writes about décor, gardening, recycling, ecology and business. He thinks all of these topics fall under the self-improvement category. He believes in the power of sharing ideas and communicating via the internet to achieve betterment.More from Derek Lotts