Small businesses are the backbone behind the economy, with over 30.7 million small and medium-sized enterprises (SMEs) thriving in the United States alone. Although success varies for each company, all startups have one common thing they need—money. Raising enough funds is crucial for small businesses to get off the ground and create a pathway towards longevity and future success. Here are the best ways to fund a new company or business.
Crowdfunding
If you have a unique idea and have a decent following on social media, a great way to get funds is through crowdfunding. When funding sites like Gofundme and Kickstarter first launched, a couple of businesses experienced massive success. However, nowadays, many aspiring business owners and entrepreneurs opt for crowdfunding. That’s why remember to stand out among the rest, and you’ll be getting funds in no time. Small Business Loans Some banks may offer loans to new companies, but they’re usually stringent about giving money to startups, making it extremely challenging to qualify. You can also ask lending companies, but some of them can be predatory, so ensure you know who you’re borrowing from before signing anything.
Small Business Grants
Organizations sometimes offer grants to startup companies that are run by women, minorities, or veterans—and if you qualify, consult with your local Chamber of Commerce to see if there are local grant funds you can get. However, make sure to check the agreement carefully and confirm you don’t need to pay anything back or agree to ‘special’ conditions.
Trading Equity or Services
Trading equities or services is when you barter with someone else. For instance, if you need some web designing done for your new company, see if you can barter with your colleague who knows a bit of graphic designing to do it for you. In exchange, you can help them with some marketing or business advice. The downside to this is that it can be challenging to convince people to do it.
Bootstrapping
One of the best ways to get your new company off the ground is through bootstrapping. It’s when you use personal funds to run your business. These can be anything, including personal savings, credit cards, mortgages, or credit lines. The only downside to this is that if your business fails, you may be facing a massive amount of debt. Incubator or Accelerator A business incubator or accelerator are ‘spaces’ that are part of a collaborative workplace and mentorship development centers. You can grab a great start here while meeting some great business partners. However, these often revolve around tech-heavy businesses, so unless your idea is in the industry, you may struggle to find one that can work for your company.
Don’t Let Go of Your Day Job
Although this doesn’t sound too appealing, it’s one of the most practical ways to fund your business idea. If you currently have a job that can meet your expenses needs while allowing you to live comfortably, don’t quit. Spend some time getting your new company off the grounds and building through the early and complicated phases with the security of your 9-5 job paying the bills. Going this route helps you face fewer compromises and lets you stick to your vision without giving into financial pressure.
Ask Loved Ones
One of the easiest and risk-free ways of funding your startup is borrowing money from friends and family. Although it can be challenging to convince investors and banks regarding your idea’s quality, often, friends and family believe and back your ambitions. They may be more than willing to help fund your startup. However, when you ask them for funds, make sure that all of you get sound legal advice, especially if you’re taking the money as a loan. As most first-time entrepreneurs know or found the hard way, getting traditional loans to kickstart a new business isn’t easy. Fortunately, nowadays, aspiring business owners and entrepreneurs have many funding options to choose from—and any of those mentioned can be a great start, helping you kickstart your dream with ease.