Regardless of how good is your idea or how solid your business plan may seem if you don’t have enough money to put it into action, it is all for nothing. Because of this, it is one of your most important tasks to learn how to provide funds for your business. Depending on the nature of your project, the infrastructure you intend to implement and the scale of the startup you intend to start with, you may have several finance options available. Needless to say, each of them has its own advantages and drawbacks. With this in mind and without further ado, here are the top 6 awesome ways to finance business ideas.
In a situation where your business idea is creative or tech-related, the first option you might want to consider is crowdfunding. There are numerous platforms out there you might want to consider, however, in order to make this offer as lucrative as possible, there are several things to keep in mind. First, you need to think about the incentive which you can offer to your patrons. Sometimes, presenting your product in the right light will be enough, seeing as how the very existence of your company might intrigue them. On the other hand, sometimes, you have to offer something a bit more concrete.
For starters, creatives can decide whether they should require a one-time donation, a monthly donation (some platforms offer this option) or do they prefer to get paid per creation. Moreover, they can organize their donors into several tiers, which can give early access or a pre-order status to some of the most generous patrons. You would be surprised just how efficient this method can become, especially when coupled with an extensive social media promotion. Considering the latest innovations on major networks like Instagram, this might show a greater appeal to Gen Z audience, whose purchasing power parity is not to be underestimated.
2. Taking out a loan
The most traditional way of funding your business lies in the idea of getting a loan, however, due to the fact that this usually requires collateral this idea is out of reach for most millennials. Still, even those with collateral might want to think twice about getting a loan. In order to check if this idea is worth your while, you might want to contact mortgage experts online and allow them to achieve your goals in the simplest, safest way possible. Apart from this, you also need to consider whether you should apply for a business loan or a personal one. If you intend to run a business as a sole proprietorship, the second option might be preferable.
3. Get a partner
The advantage of getting a partner brings numerous benefits to the table. First of all, you get to split both risk and reward of running a business. Apart from this, you can feel free to allow someone to take up a part of your administrative task and get more time and energy you can dedicate elsewhere. The advantage of a partner (good partner) over a subordinate assistant lies in the fact that this person is equally invested in the success of your business as you are.
Unfortunately, accepting someone’s money and aid doesn’t come for free and this also means that you will have to hand over some of the control over your company to the other party. Finally, keep in mind that shared interest doesn’t necessarily mean a shared vision. Therefore, you need to find someone with the right mindset to team up with.
If you have a detailed plan for a product that you intend to peddle but not enough funds to actually produce the good, you can always enable a pre-ordering system. Here, you will offer your potential clients a unique chance to pre-order these products with a massive discount. In this way, you receive the money in advance and get the resources you need to put your plans into action. The downside of this idea is the fact that people are often skeptical of young entrepreneurs without portfolio to back them up.
5. Selling invoices
Another great idea for funding your business lies in the idea of selling invoices to a factoring company. In a situation where you need to rapidly provide your business with a capital injection and can’t wait for account receivables to finally arrive, you might want to consider selling them. Here, you will be at a loss of up to 5 percent of the invoices total value (usually it’s within a 2 percent range) but, you can receive a full amount immediately.
6. Selling an asset that you own
Finally, you might want to consider selling an asset that you own in order to finance your business. This is both risky and worth your while, depending on whether you succeed or not. If you run a limited liability company and your business venture fails, your private assets will still remain intact. On the other hand, if you sell an asset and fail it will be similar to the situation where your sole proprietorship failed. Needless to say, this is one of the reasons why so many startup owners and young entrepreneurs avoid this business structure in the first place.
At the very end, you need to understand that learning how to provide funds for your business isn’t a skill you will use only once. Your business constantly needs some working capital and if you decide to branch out, you might feel the need to try one of the fundraising techniques all over again. All in all, mastering any of the above-listed six skills is something that any entrepreneur needs in order to run a lucrative business, regardless of its structure or industry.