Business ideas are a dime a dozen. Good business ideas are slightly less common but still somewhat easy to find. Unfortunately, business funding – especially for startups – is difficult to locate whether or not your idea is a good one.
While finding funding for your startup is difficult, it’s not impossible. There are several ways to secure the capital required to get your idea off the ground.
With this in mind, let’s take a look at seven ways to fund your next startup:
It might sound miraculous, but angel investing is a down-to-earth source of business funding. Angel investors tend to be wealthy individuals looking to help up-and-coming businesses get a foothold despite limited access to capital. Despite the name, angel investors are not doing it out of pure kindness; they expect a return on their investment, typically in the form of ownership equity. With this in mind, it’s essential for startups to know the difference between an angel investing opportunity and a deal with the devil. In other words, don’t get involved with an angel investor unless you’re willing to live with the results of the arrangement.
Do you have excellent credit? More importantly, do you have assets that can be used as collateral? If so, you might be able to get a bank to lend you the money needed to launch your startup. Once again, it’s critical that you understand the risks involved in such an arrangement. If you’re unable to pay the money back, the bank may seize control of your car or even your house. With that said, traditional bank loans are perhaps the safest bet when it comes to securing capital for your business.
Are you a sports fanatic who seems to always guess right about who wins and loses? If so, you might want to explore the idea of placing sports bets as a way to make money. While NFL sportsbook action is hot right now, the same can be said for the NBA, NHL, and FIFA World Cup. As long as you’re aware of the risks involved and remember to never bet what you can’t afford to lose, sports betting can be one of the most lucrative means of securing funding for your startup.
Those with one or more credit cards with high credit limits can use them to fund their startup ideas. It’s one of the easiest ways to access business funding. However, the interest rates can be crippling, depending on your credit history and credit score, so double-check before using credit cards to cover startup costs. If your credit is exceptional, we recommend applying for a separate card account geared towards business and using it rather than maxing out your existing accounts.
A decent amount of savings can be used for just about anything. Rather than spend it on a lavish vacation or a down payment on a new car, you can use it to fund your business dream. It’s the least risky of all the options, but once the money is gone, it’s gone for good unless you’re able to replace it via profits or by some other means.
The peak of crowdfunding popularity has come and gone, but it remains a viable option for those in desperate need of business funding. If your idea is good enough, you’ll be able to recruit several investors to get involved. However, it’s easy for your pitch to get lost in the noise due to the high volume of fellow entrepreneurs who are also pursuing crowdfunding as an option. Chances are you’ll have to agree to provide crowdfunders with decent incentives, such as free products or bonuses, so take time to make your offer as appealing as possible.
Is someone you know sitting on a lot of money? If so, consider approaching them with the idea of becoming an investor in your business idea. While borrowing money from friends and family can be a relatively easy way to secure funding, the process should be done by the book, just like you would with a traditional lender or investor. Write up an agreement, get all parties to sign it, and keep everything on the level. That way, the arrangement is less ambiguous and more defined for all parties involved.
Who doesn’t have an idea for a business? But for those who strongly believe their idea is a winner, the difficulty in getting funding can be discouraging. Fortunately, there are many options worth pursuing.
Julie Steinbeck is a freelance writer from Florida. She enjoys writing about business, finance, health, and travel.