You will often wonder how and where you can get more funding in your entrepreneurship journey. Getting money is not always easy. When you require urgent funding, the appropriate knowledge on different types of capital and how to access them can be the silver bullet you need.
You may have saved a bit of cash or gotten some money from friends and family. When these sources prove insufficient, what other options do you have?
The Funding Options Available
Since money is an important pillar as you operate the challenging journey of entrepreneurship, what options for startup funding are there for you?
- Business credit cards
- Crowdfunding
- Grants
- Family and Friends Funding
- Seed funding
- Venture capital
- Business loans
Navigating the Vast World of Funding
With such a wide pool of funding options, how do you choose?
Learn about your options
You will not be ready to make an informed decision without the requisite knowledge. Whereas this article provides a little knowledge, you will be tasked with going out of your way to learn more to get your best fit.
Know how your Business is Performing Financially
It is rare for anyone to give you funding unless you are well versed in how you intend to spend the money. It is up to you to create your business plan and identify areas where the money will be used.
Seek Relevant Financial Advice
Seek advice from licensed individuals. Financial advisers may help you identify the best deals and financing options for your business. Whereas proper funding will help you start and grow, the wrong funding might put you into debt and financial ruin.
Venture Capital
Venture capital is funding from venture capitalists. Venture capitalists fund promising startups and are often members of a venture capital firm. The firm has a board that votes on the companies that will be funded
Venture capitalists buy equity into a company and, by doing so, expect a payout once the business is thriving. Venture capitalists offer capital, strategic assistance, introduction to customers, and other business needs. If your startup fails, the investment is written off as a bad investment.
To acquire venture capital, you should ideally have a minimum viable product. Venture capitalists invest according to your geography and the stage of your company. Some may invest in specific sectors of the industry. Make a good pitch while seeking venture capital, and always have good lawyers who will help you understand the nitty-gritty of your deal.
Small Business Loans
The loans are offered by a myriad of traditional and alternative lenders, and they may help you:
- Grow your business
- Fund research and subsequent development
- Expand into new areas
- Improve your staff levels and any other uses
Business loans vary according to your needs, the terms of the loan, and the period for loan repayment. You could opt for
- SBA small business loans
- Equipment loans
- Small business term loans which are for a fixed dollar amount
- Working capital loans
- A small business line of credit
Business Credit Cards
Some credit card issuers offer cards to businesses, and these cards may come with perks, including airline mileage points or cashback rewards. A downside to credit card funding is you may be required to tie your business card to your personal credit details.
Defaulting and late payments may negatively impact your credit score when this happens. Interest on unpaid balances can range from 5% to 20%, which may be high.
You may apply for a card through your bank or choose a card issuer that does not require your details.
Crowdfunding
This refers to the practice of raising money through multiple funders using a crowdfunding website. While crowdfunding, you can raise startup capital while promoting your product or service.
To start crowdfunding, you only need to create a profile on a crowdfunding website, describe what you offer, your business model, and the amount of capital you need.
Often people donate to your company due to an incentive such as a free product and or service, a discount, or even shares to your company. To have a successful campaign, you need to have an attractive product and a compelling story. You might have to part with a certain crowd funding fee that is varied according to the site you pick.
Angel Investors
An angel investor will invest in your start-up, often at an early age, in exchange for equity in the business. Angel investors offer $25,000 to $100,000 per business but may give more depending on your needs. You may need some introduction to get an angel investor. Alternatively, an investor may pick you out from a crowdfunding website.
Grants and Funds from Family and Friends
Family and friends may offer aid in your time of need, often with no strings attached. This is an ideal funding source, but it is rarely available for the average entrepreneur.
All forms of funding come with advantages and disadvantages. Sifting through each option and getting the correct advice is just what your business needs to grow.
