Many people might have a startup idea that they’re passionate about and that they think is even worth their time but don’t proceed with it or give it any real thought because of the financial implications that come with it. Funding a new business in today’s economy can be a real tough task especially if you don’t have any prior business experience or a good business/personal credit which you might not have due to which the banks might be hesitant to loan to you. While getting a small business loan and selling shares of your company is a viable option for some, most of the time new businesses won’t be able to afford that luxury so here are five creative ways you can fund your new business.
- The Bank:
Getting a loan from the bank is still one of the most practical ways of funding your small business although securing the loan won’t be an easy job. The bank requires certain prerequisites form you that you’ll have to meet, these prerequisites being a healthy credit score and offering bank collateral. However, if you can check off these requirements, getting a loan from the bank can be the exact thing your business is looking for since you won’t be risking losing control of your companies by selling shares and the bank won’t have a say in how your business is run.
Crowdfunding is one of the most famous ways of generating a capital these days, and it means putting your idea forward on the internet and asking like-minded people to donate you the money, and it is a way that won’t cost you anything. With now successful startups like Ouya and Bitvore getting funded because of crowdfunding, there’s a good chance that you’re business idea will also be funded provided it is a practical and a credible one that people can get behind.
3. Venture Capitals:
If you have an idea that you feel like will be an interest to a certain company, then venture capital is the way to go. Venture capital firms are certain companies that will fully or partially fund a business startup if they find if of their interest and will give you the freedom of running your business. However, these firms are expected to have a huge part of your business equity in return when it’s profitable. This option might not be for everyone since you risk losing control of your company, but sometimes it is the most practical way to fund a business.
4. Financing the business yourself:
There’s a more than likely chance that you will have some savings collected somewhere as you’ll already have an estimate on how much finance is required for your business to break-even at least considering nobody just gets up one day and decides to start a business, there are hundreds of hours of planning behind it. Using those savings to fund your business can be the key to your startup becoming profitable as soon as possible since you won’t have to worry about monthly repayments like you would have if you would’ve borrowed from a bank or repaying the loan with a hefty interest rate.
David Simmons is a financial analyst and accounting expert. He has in-depth knowledge about setting up small businesses as well as creating profitable investments. He regularly contributes articles related to business and loans at https://www.ebroker.com.au/.