6 Ways To Finance Your New Business - TechGeek365

6 Ways To Finance Your New Business

6 ways to finance your new business

Launching a new business venture is every entrepreneur’s dream. It allows them to grow their income while working at your pace. That’s why, every year, new business ventures are introduced to the market, looking forward to grabbing a share of the promising market. While businesses are different in the way they operate, they have one thing in common. They need capital to establish. If you are out there wondering the right way to finance your new venture, this article is rightfully meant for you. Here, we will switch our attention to the top ways you can finance your new business.

Personal Savings

Business specialists often say that if you want something done well, you ought to do it yourself. This, therefore, means that using your savings to start your business is the first way to go. Many benefits come with using your savings to open a business. First, going this way means that you won’t have to go knocking on doors and shaking hands all in the name of securing enough money to start the business. We both know tiring this process can turn out to be.

Besides, funding your venture portrays a positive image to future investors. According to Mona Lisa Jovellanos Kozel, an influential Filipina woman, this shows them that you are committed and ready to take risks. In return, this indicates that you are confident in the business idea, which is crucial. Another critical thing to note is that opening a business doesn’t mean that it will thrive. Luckily, with personal savings, it means that you won’t have debts to settle in case your business closes.

Secure A Loan

If your savings can’t fund your business, then you may consider applying for a business loan. Thanks to advancements in tech, today, there are many ways to raise the needed capital through online loans. According to the SBA, about 75% of business financing comes from business loans, lines of credit, or credit cards. According to experts at nav.com, one size doesn’t matter when securing a small business loan. It’s recommended that you find an option that meets your business needs and one with favorable rates and terms. Some loans have small APR, while others are known for easy access if you don’t have a good credit score.

To get approved for small business loans, you have to meet the following:

  • Been in business for over two years.
  • Your business must have substantial annual revenues (at least $100000).
  • Good credit score.

The fantastic thing is that the rules vary depending on the lender. When it comes to applying for these loans, you should ensure that you prepare any loan documents you will need to show ahead of time.

Angel Investors

Looking for angel investors is also another way to get your business off the ground. Who are angel investors, you may ask? These are experienced entrepreneurs with money and time that choose to fund a new company in exchange for equity. They come in during the commercialization stage. Having angel investors on board carries a lot of weight to potential investors’ eyes as they gain confidence in your business. The chances of attracting angel investors are minimal. They don’t have all the time at their disposal. This means that you have to be much prepared before thinking of going this route to avoid missing the one-time opportunity you are granted.

Government Grants & Subsidies

Another perfect way to fund your new venture is through government grants and subsidies. For this option, repayment isn’t necessary as long as the conditions set are met. This may sound like easy money, but it’s not always the case. One thing to note is that there are hefty competitions and strict criteria for this kind of funding. Hence, when you opt for this method, you should consider investing plenty of your time in the application to ensure perfection.

Some of the things included in the application include:

  • Project description.
  • Work plan with full costs.
  • Experience and background on key managers.
  • Application forms.
  • Benefits of your project.

Friends & Family

What are friends and family for if they can’t help visualize your idea? Well, funding your business through the help of families and friends is a viable option for many companies, especially during this pandemic. According to a report by the Global Entrepreneurship Monitor, about five percent of people in the US have invested in companies started by people they know or are related to.

Business specialists often insist that when it comes to funding your business through family and friends, you have to consider members familiar with the knowledge of the business world. It will also help if you went for individuals who have faith that your venture will succeed and understand your plans and the risks involved.

From your end, you must as well demonstrate passion and due diligence by having a sound business plan and direction. With that, it will be easier to come up with the right figure of what is needed to get your business off the ground. You can as well come up with a repayment plan and document everything to manage the loan efficiently. The fantastic thing about asking friends and family for help is that they can understand if you don’t meet the repayment schedule. Therefore, you won’t be stressed if the business doesn’t pick up as per your plans.

Crowdfunding

What is crowdfunding? It’s a widespread concept in today’s world. It involves signing up for a crowdfunding platform such as GoFundMe or Kickstarter. These platforms allow other people to donate cash towards your cause until you achieve your financial goal. Not long ago, a report released by Startups showed that 78% of crowdfunding campaigns reach their goals and are successful. It’s approximated that in five years, these crowdfunding campaigns will be in a position to raise over 300 billion dollars. Now, imagine what you can do with such a colossal figure. Well, that’s the power of the internet, and with a perfect idea at hand, you can quickly secure the bag.

Having a business idea is one thing. Converting the idea into a business is another thing, and that asks for an investment. Today, there are many ways to fund your business, as mentioned in this article. Some of the methods are easy to work with, while others ask for much. By reading through this piece, you will find an option that works perfectly for you.

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About Brian: Brian Jackson is the founder of Shoestring Branding - a marketing and branding blog for entrepreneurs, with an emphasis on internet-based tools and strategies.

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