Getting ready to launch your own business is one of the most exciting periods in any entrepreneur’s life. But it can also be the most daunting. You have logistical concerns, utilities, and services that need to be in place, and finding qualified help before you can even open up for the first time.
And not least of all, you need to find a way to pay for all of it.
That’s why finding the right fundraising strategies for your new business is essential for getting your venture off the ground. If you’re struggling to put together the funds for a new business, check out these top tips to help make sure you make it to opening day.
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1. Seek Aid from the Small Business Administration
The Small Business Administration (SBA) is exactly what it sounds like, a federal agency tasked with providing resources to the nation’s small business interests.
They offer start-up loans to help encourage small business growth. And because the government has a vested interest in seeing business growth, these loans are often easier to get than equivalent loans from private lenders. They also offer disaster loans when you’re trying to recover from natural disasters, pandemics, and other emergency situations. When it comes to SBA disaster loan credit score requirements, you need to have a credit score of 620 for a faster and easier approval. But you can still qualify even with a lower credit score as long as you have other proof of eligibility such as consistent payment of utility bills and rental expenses.
But beyond that, they offer resources to help you get your business started like budget tools, guides on applying for the right loan for your business, and other information that can be a lifesaver for your new business.
2. Personal Financing
After the SBA, another common stop for many aspiring business people is personal financing. If you believe in your idea, have a strong credit score and/or collateral that you can offer up, this can be the most direct means to get funding for your business.
The down-side is that this is a risky proposition. Whether your business succeeds or not, you’re still personally liable for any personal loan that you take out. And because it’s also a risky situation for the lender, it can often be difficult to secure a large enough loan, depending on the needs of your business.
Over the last decade or so, crowdfunding has grown from a bit of a novelty to a serious and popular means to launch a new business. Kickstarter is still the best-known and most popular, though Indiegogo has been steadily gaining on it.
The way that these sites tend to work is that individual patrons pledge money towards your business idea. In exchange, they get a perk of some-kind, ranging from a simple thank you to pre-orders of the completed product to exclusive perks only available to donors. The more creative you get with the benefits you offer, the more interest that you’re likely to generate.
Just beware that crowd-funding sites incur not insignificant fees on successful campaigns, usually in the form of a percentage of the total funds raised. More than a few creators have failed to take this into account, ending up being unable to deliver on certain promises that they made. SO be sure to factor those fees into your accounting.
4. Vendor Financing
While it won’t help you finance your business completely, it is sometimes possible to work out arrangements with your vendors that can give you some breathing room in your business’ early stages.
Most vendors give you 30 days to pay invoices before they start adding fees onto your bill. But if you reach out to them, it can be possible to work out an extension. This can give you precious time to meet your expenses in those tense early weeks of business.
5. Find a Start-Up Accelerator/Incubator
Start-up accelerators and incubators are hubs that provide resources for new businesses. You’ll find them most often near colleges, particularly ones with strong business programs.
These hubs can put you in touch with potential investors, networking opportunities, and mentors who can give you sound fundraising advice.
But probably their biggest perk is that they could let you offload a lot of your startup costs. If you apply and are accepted into one of these programs, you gain access to the facilities, usually including your own workspace and other business resources. Those savings can then let you stretch your startup capital a lot further.
6. Seek Out Venture Capital
Venture capitalists are prospective investors who want to put their money into businesses with potential for growth. In return, they usually a share of equity in the company, making them part-owners.
Venture capitalists can be a great resource because, in addition to providing funding, they tend to be experienced business people themselves. And to help protect their investments, they have every incentive to provide guidance and aid in running the company.
Though that be either a help or a hindrance. You’ll want to make sure that you only take help from a VC that you’d actually want to work with. Incompatible personalities or conflicting goals for the business could quickly turn the situation into a disaster.
7. Seek Out Dedicated Business Funding Platforms
If you’re having trouble securing loans from more traditional venues, you’re in luck. There are a number of business funding platforms aside from your regular bank that specialize in small-business lending and resources.
Some of these are conventional lending services that just happen to specialize in business loans. Others are more like networking services that help put entrepreneurs and small business owners in touch with third-party investors.
Requirements vary from one service to the next and usually rely on credit scores or prior income, things of that nature. So some may be better fits for your circumstances than others.
The Right Fundraising Strategies Will Have You in Business Before You Know It
The old saying goes that you have to spend money to make money. And that can be a challenge if you only have limited resources to work with.
That’s why employing the right fundraising strategies is essential to securing the capital that you need to get into business in the first place. But with these resources at your fingertips, the opening day could be closer than you think.
But of course, this is just the beginning of your journey. To keep abreast of all the business and financial news and views that your venture will need to thrive, be sure to keep up with all of the latest from San Antonio Express-News.