Aspiring entrepreneurs often have creative and interesting ideas for their new businesses but lack the funding needed to turn ideas into reality.
From buying raw materials to starting marketing campaigns, everything you need for a small business requires money. This is why you need to get funding for your small business ideas.
Before, raising capital to start a business meant hours of work devoted to business plan creation and presenting the plan to investors, hoping to get their approval in funding.
While a solid business plan is still essential, obtaining startup funding is easier today.
As more support pours for small business owners, many funding options have opened up, making it possible for more people to bring their ideas to life.
A Note Before You Look for Funding
First things first, take your specific business into account. Being able to define your niche makes gathering funding easier.
Start by researching and approaching investors to learn how to pique their interest in your business.
Once you’ve defined your niche, it’ll be easier to summarize your small business and what makes you unique from the competition.
If your business provides products and services for an underserved area, for example, there may be specific funding or grant to help establish your startup.
How to Get Funding for Your Small Business Ideas?
1. Consider asking for assistance from friends and family.
This is one of the ways to get funding for your small business ideas.
This might seem like a ‘daunting’ prospect but it’s the most accessible option for most people. Tapping the people who are closes to you is a good first step before you seek external funding.
After all, asking never hurt anyone. Before you ask for funding, though, you should have a business plan ready.
This way, you can persuade them by telling them what you’re selling, how much money you’ll make and whether you’re asking for an investment, loan or a gift (i.e., whether they should expect to get returns on their investment on you).
2. Look into crowdfunding.
Recently, crowdfunding has gained traction as a surefire way to get funding for your small business.
Websites such as Kickstarter or Indiegogo provide startups with a platform to raise funds for their business ventures. Compared to seeking accredited investors or applying for a loan, setting up a crowdfunding campaign is more efficient in getting your message across to the right people.
With the right platform, you can tell your startup’s story, share your vision and mission and set up enticing rewards for interested funders.
3. Seek help from the Small Business Administration (SBA).
The US government continues to support the growth of the small business sector via SBA’s numerous loan options.
One of the unique selling points of SBA loans is their low-interest rates. Your interest rate will depend on the qualifications you bring to the table, as well as your creditworthiness.
Also, unlike traditional loans, you won’t see interest rates at double digits with the SBA.
4. Try purchase order financing.
Different factors impact a business’ cash flow, including supply and demand and seasonality.
For example, some businesses find themselves unable to fulfil large orders due to the lack of funds. During these instances, consider purchase order financing.
A purchase order financing organization can easily provide a cash advance so your business can purchase the needed materials and then collect the money once you sell your products.
5. Presale your products.
If your startup is solely based on the selling of a single product, the easiest way to produce funds is to manufacture the product for preselling.
By preselling your products, you ensure that you won’t make too much and have a warehouse full of unsold foods.
This venture can be a little intimidating for startup entrepreneurs, so take the time to consider the pros and cons of collecting funds before providing a product.
Also, establish a solid timeline to stick with it. Otherwise, frustrated customers might demand their money back.
6. Consider alternative lending sources.
This option will require due diligence on your part since you want to be sure you’re working with a trusted lender.
In most cases, however, these lenders fall outside of the government institutions or banks category.
Regardless of the funding institution you choose, spare the time to extensively investigate all the terms and conditions and make sure they suit your business plan. Also, seek guidance from fellow small business owners or enterprise entrepreneurs.
On top of that, make sure your available finances are stable before you apply for funding.
Creating a financial report proves that your business is on the right path financially — a must-have if you want to convince investors to fund your business.
Finding funding for your startup is the hardest part of starting your business, but it is also the most rewarding.
Once you’ve received approval for a loan or found other people willing to help, you can start your dream job — owning a business.