Are you starting a business of your own and struggling with financing? Financing is one of the most challenging aspects of starting a business. Luckily for you, there are several options that you can consider that can help you finance a business in its starting stages.
From bootstrapping to venture capitalists, there’s going to be one of these options that you can opt for if you want to start your own business. Here are some of them.
Personal financing
If you have a good personal credit score, there are many things you can do financially to take out personal financial assistance for your business. That said, there are several options that you can try to fund your business from the start.
For example, you can take out a personal loan, home equity loan, or car title loan. You can go for anything if you have the finances you need. However, if you have poor credit, there are still several options you can go for, like bad credit loans, loans with no credit check online, or even payday loans if you’re so inclined.
Just ensure that if your business can’t pay this on time, you can pay for these loans from your pocket.
Love money
Love money is a type of financing that comes from your spouse, friends, or even family. It’s called love money since it’s given with no expectations of gains, but most of the time, it can be exchanged for a small favor in the future.
That said, love money is usually a source of conflict, so before you accept it, create a contract first.
Angel investors
Angel investors are high-net-worth people willing to offer you money in exchange for a little bit of equity.
Most of the time, they believe in the entrepreneur’s vision and are more inclined to see other entrepreneurs contribute to the industry instead of profits. Usually, they invest their extra money since they are usually leaders in their industry or are firm owners, business owners, etc.
In return for risking their money, they have the right to some aspects of the managerial side of the business, which often involves a seat on the board of directors, and have their slice of the stocks of the company for the equity they have.
Venture capitalists
Venture capitalists are a group of private investors willing to finance small businesses and entrepreneurs looking to get a foothold in the industry.
These private investors are typically part of a limited partnership (LP) and invest in one venture capital fund given to a business idea. Most of the time, venture capital funds are managed by a committee in charge of finding startups that fit their goals.
If the group decides to back a startup, they will offer financing in exchange for equity. The committee members usually look for a startup ready to ship their products and services on short notice. Not only that, but they are also looking for startups with huge potential for aggressive growth.
Nowadays, however, most venture capitalists are looking for tech-related startups that delve into IT, mobile apps, online services, etc.
Local contests
Let’s face it unless you have an extremely incredible idea and strong business experience, you’ll probably not go into Shark Tank. If you don’t know what Shark Tank is, it’s a show that lets business owners present their business idea, and a few investors will look at them and decide if they want to invest in it.
Due to the show’s popularity, many local COCs and SBAs run their own Shark Tanks, looking for good business ideas and startups to fund their money. It’s a good chance if you’re an entrepreneur looking to find financing for your startup. However, note that most of these are done locally, which means that your business’ order of operations is done locally.
That’s good, however, because since the area is limited, there’s a good chance that your business can be unique or at least have little competition, giving you a good chance of being offered a grant. Also, if you’re practicing your pitching skills, this can be good practice for you.
Final words
One of the biggest challenges you’ll encounter for a startup is the financing aspect of it. Money is hard to find, but luckily, there are a lot of options that you can consider for financing. However, do remember nothing is free, and most of the time, you may be given financing in exchange for equity or a slice of your profit in the future. Before you pick one source of financing, make sure that it’s suitable for your financial situation.
