How To Start-Up Financing, AKA What Are New Business Options?
Having a start up is exciting for any blossoming entrepreneur. We live in a time where small businesses are able to expand well beyond where they once could, the internet opening a company up to international markets.
But just because you launch a modern start-up doesn't mean you don't need traditional financing. Without seed money, you won't get very far. Luckily, there are several ways to find it.
Why You Need a Business Plan
First, you need a business plan. This will be presented to any potential investors, so at this stage it is crucial. However, that isn't the only reason to have one.
A business plan is a way of organizing your goals, showing your current status, making projections for the future, and offering yourself a blueprint to follow. Without one, the process would be clumsy, and your efforts less direct. Your chances of success will go down every minute your mission statement isn't written in stone.
If you need help creating a good business plan, check out this read by entrepreneur.com.
Angel Investors
Once you have your business plan in place, you can begin looking for business investors. These financing gurus can offer you advice, as well as money that will go towards overhead, expansion, and the needs of your business.
An angel investor (aka business angel, informal investor, angel funder, private investor, or seed investor) is often an individual providing capital for a start-up. Angel investors usually give support to start-ups at the initial moments, when most investors are not prepared to back them up.
A small but increasing number of angel investors invest online through equity crowdfunding, angel groups, or networks. These organisations serve to share investment capital (as start-ups valuations are increasing over time), and to provide advice to their portfolio companies. Over the last 50 years, the number of angel investors has skyrocketed.
What is in it for them? Hopefully a return on that investment, as per the agreement made at the time of investing.
Small Business Loans
If you are unable to find investors, or you are nervous about going that route (and be sure, investors are no fools, they will be thoroughly questioning your every move, your strategy, your plans, and products and services to get you, and consequently, their investment, started right), you have another option. A small business loan from your local bank or credit union can offer you the seed money you need. Just look around town for the best interest rate, default policies, and also read the fine print.
Should you need a basic overview of small business loans, check this guide by nerdwallet.com.
Personal Financing
You don't have to look outside for financial assistance. You can always invest your own cash, effectively putting your money where your mouth is. Many bootstrap start-ups begin this way, keeping costs low and paying for everything out of pocket, and eventually, profits.
And honestly, you should always invest your own cash. It will be nearly impossible to get an investor of any sort without proving to him that you trust your own venue. And that is a very hard thing to do without using your own money to seed your own business.
Seed Your Start-Up, Watch It Grow!
Your business relies on the strength of your product and service. But it also needs a capital to get off the ground. Your business can grow without additional capital, that's right, but at what speed? How many additional people can you hire to market, develop and sell your products and services with your current cash?
