Funding a business doesn’t come easy for everyone. Some entrepreneurs often choose to use their own money. Others borrow from family and friends. While these are common options, there are other ways to fund your business without depleting your financial resources or borrowing from your network.
Here are six ways to fund your new business.
1. Start a Crowdfunding Campaign
Crowdfunding is the process of raising capital from the general public. You pitch your idea and offer an incentive as a “thank you” for investing in your product.
For example, you’d like to make a waterproof backpack. You could offer exclusive, limited edition designs to those who will be funding your product.
2. Apply for a Bank Loan
A bank loan is a go-to option for many entrepreneurs. When applying for a bank loan, always consider the interest rate that the bank will give you and how long you’ll have to pay for the loan. Take your time in choosing the best offer. Additionally, consider looking into small business lending companies, as they may be able to provide lower interest rates.
3. Pitch to An Angel Investor
An angel investor is an individual who is interested in investing in your business. In return, they may ask for an equity position in your company.
Angel investors could be family, friends, or wealthy individuals who are already in the business of investing in start-ups or new businesses.
4. Apply for Government Grants or Assistance
Your eligibility for a government grant or assistance would depend on the type of business you have. Typically, these grants are geared towards companies that are looking to expand. However, you may be able to find out that suits you.
5. Work With a Venture Capitalist (VC)
Venture capitalists are large organisations or corporations that invest in new businesses with high growth potential. To be tapped by a VC, prepare your business proposal and crunch your numbers. You must be able to present the income potential of your idea.
6. Use Your Credit Card
Using your credit card to fund your business is risky. However, if you’re only using it to fill in a minor financial gap to get your business started, it might be okay. Always have a back-up plan on how you’d pay for your business expenses in case your company goes bust.
To decide on the most suitable option, consider your financial situation and the type of business you would like to build.
Still not sure what to do? Don’t worry. Kidmans Partners offers business start-up services so you could turn your idea into a reality. We could help you assess your finance requirements and advise on the best sources of funding. Additionally, we could assist you in drafting proposals, cash flow projections, and budgets.
For more information, call us at +61 3 9836 2900 or fill out our contact form.