Running a business requires capital, and it is critical that there is funding available to cover the cost of operating (rent, utilities, office supplies, hosting for your website, etc.), marketing (advertising costs, social media business tools, flyers, etc) and cost of goods (the materials that you will need to create your product or be able to deliver your service to your customer). Luckily, with the gift of technology and innovation, there are plenty of options that go beyond the traditional bank loan. Here are some ways that you can fund your business:
Crowdfunding
Raise smaller amounts of money from a large group of people. These people can be family, friends, your community or investors. Websites like GoFundMe and Kickstarter make it easy to setup campaigns and send to people you know via sharing. You can even setup a fundraiser on Facebook. These platforms also offer analytics to help you keep track of what you have raised against your goal.
Savings
Now, I know that this one takes a little preparation (ok, a more than a little in most cases.)- but because outside help with startup money is not always possible, saving from your earnings is a must and can help you be more prepared for your costs. This is because to be able to come up with a savings goal, you will need to map out all of your costs, anticipated and unanticipated. This involves earning while you You should consider setting aside a percentage or set amount from your earnings to save towards your goal.
Investors
An investor can be someone you know or a stranger. The money is often considered a loan and is expected to be paid back, usually with interest. Alternatively, you can offer an equity stake that would create where the investor has predetermined roles within the company. For example, will this person have decision-making power in operating activities? Or are they considered an angel investor, or a silent investor? These investors provide money for the business but have no say in day-to-day operations. They are also not responsible for the debts of the company. Different investors have different requirements on how you qualify. For example, you may need a business plan or have been in business for a certain amount of time. P2P (peer-to-peer) lending websites help match investors (lenders) with borrowers.
Traditional Bank Loan
This is the traditional way of obtaining a loan to start your business and they often have the most stringent requirements. The requirements vary depending on the lender but there are normally certain things that are necessary regardless of the bank that you choose. These items include:
Financial statements such as balance sheet, cash flow statement, and income statement
Financial projection of up to 5 years
Business tax returns
Business bank account statements
Leases (if applicable)
Business licenses
The saying that 'It takes money to make money' is true. Starting a business is an amazing journey if the appropriate time is taken into researching your industry and trade, and being prepared for the challenges that every business faces when just getting started. Having enough money aside to overcome these hurdles will make it a little less stressful. No matter where you are in your journey of starting or growing your business, it's important to know that if you remain positive and persevere through the obstacles you will be awarded with something that you can proudly say that you started yourself.
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