Even the best business idea is limited by your ability to finance its realization. Therefore, the more fundraising techniques you have in your pocket, the greater your chances of success are. Some of these techniques depend on the amount of money you need, others are locked out by the specifics of your industry, still, your ability to combine and customize them at your own behest is mostly what determines their efficiency. With this in mind and without further ado, here are seven awesome methods you should use to finance your business.
1. Don’t quit your day job just yet
Your business might not even need that big of an investment, to begin with. In fact, for most startups and small businesses (particularly those home-based), can run on a budget. Nonetheless, it might take a while until your business is self-sustainable. Until this happens, you shouldn’t quit your day job, seeing as how this will be your main source of income until your company becomes fully profitable.
As an alternative, you could also get another roommate or find some alternative way to make a bit more cash for the time being. This involves the idea of getting a side-job online but still, with all the work required to launch and run a startup or a small business, it’s highly unlikely that you’ll have time for this. On the other hand, by choosing something passive like day-trading or investing in cryptocurrency or ICOs just might work.
2. Traditional loan
The most traditional way to finance your startup is to go to a bank or a credit union and apply for a loan. Nonetheless, getting a loan is not as easy as you might have thought and doing so for business purposes requires even more finesse. Therefore, you might want to look for investment loan specialists to advise you on this situation. Who knows, you might need more than just a loan. For instance, you might need 90 percent (even 95 percent) home loan. Financing an unusual property type can be as difficult yet it might be what your business requires. Either way, you’ll need some professional help.
Tech businesses often have the option to go with crowdfunding options like the one offered by platforms like Kickstarter. In this way, you give your audience a chance to see tour project idea and decide to fund your business in order to see this dream become reality. The greatest problem with crowdfunding lies in the fact that it depends more on your ability to present your idea in the best light than the idea itself. Where some see a problem, others see a possibility and this is definitely a goal worth boosting your presentation abilities for.
4. Subscription content service
Artists and independent video game developers sometimes turn towards platforms like Patreon, which allows them to run a subscription-based content service. For instance, small video game developers can offer a demo for free and then set a financial goal that will allow them to focus more on this task or start working on this project full-time. In exchange for this, patrons pledge a certain amount of money on a monthly basis or per creation.
On the other hand, this makes a company more dependent on its patrons, which means that a temporary outrage may result in a serious income loss. Furthermore, it forces you to regularly publish the latest version of your unfinished work, which gives ambiguous user-experience in the long run. Overall, this financing method has both its pros and cons.
5. Borrow money from a friend or relative
This particular fundraising method is quite controversial seeing as how it involves allowing your money-gathering process to interfere with your personal life. Just because a close relative lent you the money with no interest, doesn’t mean that you won’t have to pay them back. Furthermore, your inability to deliver the money as agreed (which can happen despite your best intentions) could harm your personal relationship for years to come.
6. Sell an asset
Losing your privately owned assets is the main reason why so many small businesses don’t register as sole proprietorships, in the first place, yet, it might be exactly what you need. By selling an asset, you don’t have to worry about the additional cost of interest rate, plus, if everything goes smoothly, you might just be able to buy back this property, vehicle or a jewelry collection. Nevertheless, if not, you’ll be left without a company and without an asset.
7. Selling invoices
Finally, you can always choose to sell some of your invoices and, in this way, avoid having to take loans or otherwise commit to a long-term obligation. Sure, in the long-run, you stand to get less money than if you were to just patiently wait for the full amount of the account receivable to arrive but when faced with a short-term financial crisis, this might be your best option. While there’s no interest rate, you do have to give up a certain percentage of the invoice’s total value (usually 1.5 to 5 percent), which, depending on the invoice might be a substantial sum.
At the end of the day, these are just the tip of the iceberg of all options you have available. For instance, you could also explore the option of peer-to-peer lending, finding an angel investor or look for a venture capitalist to help you out. The reason why we picked the above-listed seven was due to their availability for startups and probability of success.