7 Ways To Secure Business Funding
Did you know that 90% of startups fail, and 1 out of 10 businesses that survive startup die within the first year? The reasons for many of the poor startups are lack of funds or fund mismanagement.
Getting funds for your business is easier than it may seem. Provided you have laid a solid plan, selling it to investors will be easy. Knowing how much you will need to set up your business is essential before securing business funds.
Expense management
Securing business funding is one of the ways to boost the chances of a business starting up strong. However, managing these funds is key to ensuring that the company keeps running smoothly. You can visit https://getdivvy.com/learn/ to discover a guide to business finances.
With that in mind, here are seven ways to secure business funding.
Start with your own funding
Before starting any business, there is a certain amount of money that ought to come from yourself. You can tap into your savings, or family and friends may be able to help you raise money.
Starting with a major self-fund is vital since you will have control of the business. The lesser loans you think of repaying, the better your business builds. Also, it maximizes profits since you do not have responsibilities to third-party business owners.
Seek capital from investors
Getting someone to inject funds into our business takes work. However, with a good business plan and proper market knowledge, you will know who to approach. Investors will only commit their funds if they see an opportunity to gain profit.
Some investors may also give you funds in the form of venture capital. Unlike investing for profit returns, venture capital serves to buy a part of the business. Therefore, the company will come up strong. However, venture capitalists will be part of the decision-makers.
Venture capitalists also focus on businesses that show potential growth. So, before settling on the funds, ensure you agree on some terms.
Incorporate crowdfunding to raise funds
Crowdfunding calls for you to pitch your business plan online through designated sites. Large crowds of people interact with the sites. Therefore, if your business plan impresses them, they result in funding your business.
Crowdfunding is not a loan or an investment. Instead, consider it a gift from people with whom you share a common vision. However, the contributors will need acknowledgment and credit for their deeds.
When you use crowdfunding, you retain control of your business with no responsibility to repay the funders.
Seek business grants
Some organizations offer grants to businesses that are starting up. These grants are grouped according to the size and type of business. Therefore, no matter the size of your business, you may receive a grant.
First, you apply to get a grant from the issuing organization. However, grants are only issued with the organization carrying out due diligence. A well-laid-up business plan will help sell your idea to the organization.
Procure a business loan
To secure the funds to start the business, you should consider getting a business loan. Not only will it provide the remaining funds, but it will also ensure that your business remains a sole proprietary.
Your credit score should be good enough to ensure that banks do not second-guess approving your loan. Further, you should provide a well-laid plan for your business projects for a few years. It will help you in convincing the lender of your business preparation.
Before settling on a particular lending facility, consider several options to ensure you have the best terms for your loan.
Get an angel investor
Angel investors are silent business partners. They fund your business without much expectation.
However, as with any investor, profits are split according to the agreed terms. With the angel investor, the profit split might be slightly lower than the regular investors. Despite funding your business, they also offer mentorship in the industry.
Get in touch with Small Business Administration (SBA)
SBA guarantees loans to businesses so that commercial banks can approve them. This guarantee applies to starting businesses since you have no history to show on your business financials.
Before SBA can guarantee your loan, they expect you to have at least a third of the total capital intended. That way, they can get the bank to finance your business.
Wrapping up
Starting and maintaining a business is no easy feat. A successful business calls for proper management of funds to maximize profits. Funding a business can be challenging, but with various ways to procure funds, you can choose what’s best for you.