Do you have a great idea for a business or a product that’s about to fly off the shelves if only you could get it there? What you need is some investment to finance your business strategy and compete with the players in your niche. Here are five ways you can get the finance you need.
Self Financing
Around 40% of new businesses are self-funded; this is also called “bootstrapping”. Bootstrapping is when you use a redundancy payment, some savings, or a bank loan to finance your small business venture initially. This is a popular financing option, but it is also a risky one.
Chances are you have a lot of faith in your business at the start because you believe in your ideas and products, but that doesn’t mean they will be a success in the marketplace. Remember, 80% of startups fail in the first years, so stay savvy when investing your personal resources.
Merchant Financing
Small businesses have a problem! They might have the product and infrastructure needed to make a splash in the marketplace, but can they compete with the more established brands in the niche – especially when it comes to advertising? If the answer is no, there are other ways.
One popular route to funding an initial advertising campaign is to use merchant financing. Merchant financing is money given to a small business or start-up to cover the initial costs of growth. A merchant financing agreement gives you money upfront and receives future profit.
Partnerships
If you can’t find funding for your business from banks, family members, or crowdfunding, a partnership could be the answer. The downside to partnerships is that you have to give up part of your business to someone else, that’s why every entreprenuer should know about business credit.
Consider a partnership if you have credit issues or you struggle to get investors on board with your ideas. Partnerships can be excellent, but it’s important that you choose the right partners. Make sure your partners believe in your products and share the same vision for future outcomes.
Crowdfunding
Traditionally, small business investment comes from bank loans and private entrepreneurs, but nowadays, there is a less conservative option – crowdfunding. Crowdfunding involves acquiring the funds you need to launch a successful business from a range of people who trust the idea.
In return for their investment, crowdfunders receive part of the business or a discounted service; they might even receive a discounted product or a future upgrade. If other investment avenues are closed, or you want to start a business backed by people, not venture capitalists, it’s for you!
Various Investors
The options listed above are diverse enough to appeal to the majority of start-up investors, but there are traditional routes to consider as well. Venture capitalists can give you the money you need to launch your business or product for a share in the company – they can also offer expert advice. Angel investors are also available and normally provide the funds for less equity stake.
