All too often, entrepreneurs will find themselves sitting on a truly innovative idea, but without the cash to turn it into reality. A lack of adequate finances should not be the reason for aspiring business owners not being able to realise their vision, yet with so many unsuccessfully securing a business loan, this is sadly the case in some instances.
All too often, entrepreneurs will find themselves sitting on a truly innovative idea, but without the cash to turn it into reality. A lack of adequate finances should not be the reason for aspiring business owners not being able to realise their vision, yet with so many unsuccessfully securing a business loan, this is sadly the case in some instances. Luckily, entrepreneurs actually have a variety of funding options at their fingertips – they simply need to choose the ones that will work best for them and their business. In this post, we uncover some of the “beyond the bank” ideas for how you can get your hands on the capital you need to get your start-up going.
Start at home
One of the easiest places to look for potential lenders is within your private inner circle of family and friends. Because these people know you the best, they are likely to be more willing to invest in your business, especially if you present your idea to them (together with a clear plan of how you intend to execute it) in a professional manner. If they believe in your ability, as well as in your business, then the chances are high that they will be willing to provide you with the funds you require to take your idea off paper and into reality. There is also the added chance of paying little to no interest – what could be better? The downside, however, is that by asking family and friends to lend the money to you, you are effectively risking important, personal relationships, so rather be sure that both sides are aware of the dangers from the start.
The venture capitalist route
Venture capitalists are investors very often looking to invest in start-ups and small businesses. Whilst some may only be looking to come on board and grow the business once it’s up and running, there are those who want to fund start-ups right from the start. Very often, venture capitalists come with a wealth of industry knowledge and resources (and cash, of course) that can be put to good use and help boost your business. So if you’re looking for mentorship as well as financing, then the venture capitalist route may just be the one for you. Ideally, you as the owner should also be rather flexible when it comes to your business, as venture capitalists tend to want to take a fair amount of control. If you’re not willing to compromise on that, then perhaps avoid this option.
Sent from above
Enter: Angel Investors. These investors can either be individuals or part of a network (think Dragon’s Den) and usually, in order for them to invest in a business, there has to be an exchange of some kind. Some settle for a stake in the business or a percentage of the profits once the business starts making money. Essentially, they have to be able to gain something in order for them to view their investment as being worthwhile and beneficial.
Ask the masses
Recently, online crowdfunding (such as that available on Kickstarter) has become a popular choice for many entrepreneurs looking for financial support for their business. Crowdfunding is when small investments are made by a number of individuals. These investments are then pooled together to form a lump sum – this eliminates entrepreneurs having to rely on a single donor. People wanting to launch their own start-ups have to create a clear campaign in which the finer details of their business-to-be are laid out for potential investors. This includes why they need the assistance, how much they require and how they intend to use it. It’s usually the ideas that come with great stories that tend to get the backing they’re after – people love a good story.
Finding the funding you need to kick-start your business may not always be easy, but it’s not impossible either. At the end of the day, it’s all about timing, looking in the right place and of course, not taking no for an answer.
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