You walk out the door bright-eyed and bushy-tailed, ready to knock their socks off with your new business, and then you realize you need cash to run it.
Funding a startup business sounds intimidating, but here are some creative tips to help you get that much-needed cash infusion to start and continue to run, your business.
13 Best Ways to Fund Your Startup
Use your savings. If you’ve saved for a rainy day, maybe it’s a good time to use some of that money for a sunny day – the day you start your business. Keep enough for an emergency fund, but some of that savings account can finance a head start. Remember though, that once that money is spent, you are relying on the business to take off in order to pay yourself back.
Sell something big. Selling your car to finance a business sounds hard-core, but if you don’t need two (or more) cars in your family, selling one can start your business. What else can you sell? Artwork, machinery, tools, clothing, if you have anything valuable that you’re willing to part with, now is the time to part with it.
Explore loans and gifts. Bank loans for startups may be harder to get in the current economy, but not impossible. The U.S. Small Business Association guarantees loans to qualifying businesses. Create a business plan and get your credit in order.
Personal loans may be an option, or even loans from family members and friends. Microfinancing sites are options if you don’t need a lot of money and have a compelling idea. People-to-people loans are basically loans from individuals who listen to your story and invest in you.
If you have good credit and a strong business plan, you’ll better your chances at receiving a loan. If you do not, perhaps a family member will consider co-signing to increase your chances.
Ask for lines of credit and wholesaler fronting. With a strong business idea and a good start, particularly if you have invoices pending, your suppliers might offer a line of credit so that you can sell your products and pay for them when you are paid from your customers. There are other online companies that will loan you money on invoices already billed, but for that, you pay a fee. This is called “factoring.”
Crowdfunding may be an option if you have a great story or idea. You post your story, your business idea, and you start using social media to publicize your plea. For best results, offer something in exchange for this initial investment in your business, such as your product, which may not yet exist! You promise, in exchange for investor money, to send them progress reports and the first of the products which roll off the assembly line.
If you offer a service, bartering can help you get started. Perhaps you are an IT consultant. Barter your services for accounting help, legal paperwork, marketing help, or any other service. This can work wonders for you in lowering your expenses by sharing services, but it’s also a great idea to get referrals and testimonials.
Start small. If you sell products, consider starting an online business first. Your startup costs are reduced if you work from your home and sell by drop shipping from your supplier. You have no need of inventory, and you pay for your purchase when your customer pays you. It’s also a way of testing the waters. If you are successful online, you have the cash flow to expand to a brick-and-mortar building.
Another way to start small, thus requiring less upfront capital, is to rent a flea market booth or a booth in specialty events related to your product. For instance, if you sell printing, rent a booth at a bridal show and offer specialty, custom invitations. Consider selling locally and delivering, thus saving the need for renting a storefront immediately.
Build your business part-time while bringing in income from elsewhere. This is a tough choice, because you’re focusing on a side business or a job at a time you really want to focus on your business. However, you may be able to freelance in your area of interest while building your business on the side.
Look for the unexpected. Business grants still exist, and so do business plan contests. Local businesses who may be potential customers may be willing to invest in you in exchange for a discounted rate once you’re on your feet. Offer your services as an “expert” guest speaker at local business meetings and ask for funding ideas afterward. The entire audience started somewhere.
Explore credit cards or retirement fund loans. Getting business credit cards can sometimes be obtained at lower interest rates and lower minimum payments than personal credit cards. If you have good credit and are willing to take on the debt, many businesses have started using credit cards. Personal credit cards can also fund your business.
You may be able to loan yourself money from your retirement fund. Ask your account manager if a loan is possible. These are usually time-limited, but sometimes have no interest.
Scale. If your business idea takes $300,000 to launch, is there a piece of it you can launch today for $20,000? Is there a niche that you can launch now? Raising money for a smaller startup may be less time-consuming and easier, and using profits to expand and scale the business keeps you afloat.
Sales, discounts, and coupon offers might be your salvation. American Express Open Forum suggests you can raise fast cash by offering a discount to existing customers. If you’re a startup, you may not have customers yet, but you can find them by giving them a pre-launch discount for large purchases.
Market to potential customers and offer a discount for signing up for a regular order. For instance, if you’re offering auto repair, don’t just give a discount on today’s repair, but offer a coupon good for three months of repair, maintenance, and testing for an upfront cost. You get cash flow; they get a market list of repairs and maintenance at a reduced price.
Bring in the bacon. Literally. Ask friends and family to host a get-together with refreshments and you outline your business strategy and products or services. Let them know when you’re expecting to launch, and that you are offering those at the get-together a special offer for pre-pay. And offer a special gift for those who offer to host another party. This is the same strategy used by many home sales organizations and by politicians because it works.
In short, if you have the fire in the belly, and you’re committed to launching your business, the opportunity for financing is out there.
Whatever your business, sit down and brainstorm with yourself or trusted friends and family to find all the ways you have at your fingertips to get cash. Then brainstorm some more.
List them in whatever order works for you: fastest, easiest, most likely to succeed, or any other order. Then work your way down the list.
Remind yourself to focus on the future. You can get mired in today’s situation, in the difficulty of raising money, but the goal is to fund your business. Keep your eye on the prize.
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