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WAYS TO FUND YOUR STARTUP

By Matthew King | Business Planning

May 15

There are always cases of where individuals have the perfect startup idea, but find it difficult funding such ideas. It could be that you probably are in such position right now. The myth about raising fund for a startup will never disappear. But the good news is that, that your startup can be a reality, with adequate funding provided for your venture.

The key thing here is information. And that’s what we aim to provide you with. Helping you understand how to go about your business financing and funding.

Self-fund your business

If you can, this is the best way to fund your business. Many entrepreneurs fund their businesses themselves without outside help. You can use your personal savings to do so, or probably sell some assets to generate the needed fund.

Nowadays, the cost of starting a business is quite low when compared to a couple of years back. The term for this is called “bootstrapping”. Though it may take a bit longer to save some money before you start and grow organically, but the advantage is that you don’t have to sell part of your business. Your business is yours and yours alone.

This option requires hard work and commitment from you. Every funding decision is a complex tradeoff between near-term and longer-term costs and paybacks, as well as overall ownership and control. There is never any free money lying around.

Look to friends and family

Friends and family can play quite some significant role in your business. From marketing, to business management and business financing. Funding from friends and family is a very popular and effective way to generate capital for your business.

You don’t receive funding from investors most times, because they don’t believe in your visions and your ability to make them a reality. Whereas, those closest to you can easily buy into your vision, as well as your ability. Its downside is that you are potentially risking personal relationships peradventure the business fails.

The solution is to obviously borrow just enough to launch the business into operations, build your website, or develop some additional pitch material if you want to go after big money.

As a general rule, professional investors will expect that you have already have commitments from this source to show your credibility. If your friends and family don’t believe in you, don’t expect outsiders to jump in. This is the primary source of non-personal funds for very early-stage startups. And you should have it.

Bank loans

There is always this skepticism about going for bank loans to fund startups. That is why bank loans are usually at the bottom of the list of considerations for source of funding. Startups seeking money from banks need a good business plan, profitable projections and some of their own money on the side. Seeking for funding is generally never easy, thus you did have to gear up for some tough work, and expect disappointments along the way.

Angel investors

When raising money from angel investors you have to keep in mind that they will own a piece of the business. Attracting angel investors could be quite tricky. Your chances will be boosted if you know your business plan, are transparent, with backed up valuation with real projections, and build a relationship based on trust.

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About the Author

Matthew King is the owner of the Startup Forums, Alkries LLC, and co-owner at TR King Insurance Marketing. Partner at Independent Life Insurance Agent Association, Medicare Training 101, and Final Expense 101. When he's not creating content about running successful businesses here. He's most likely developing processes, diving into SEO, or gaming with his friends and wife.

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