If you are trying to start your own business, one of the first major hurdles is figuring out where to find the money to get started. The strategy that you use might vary based on the type of business or product you are trying to start, your personal assets and the market for your services. There are plenty of options to choose from, and you may need to select a few in order to get your idea off the ground.
One of the most common ways for companies to find large amounts of cash to get started with is through investors. This type of funding offers a certain amount of security for you if your business fails, as you won’t necessarily have to worry about paying back a direct loan. Generally, investors provide some or all of the capital you need to get going, but rather than being paid back the initial amount, they will earn a portion of your profits. Some investors may also want input on how your business is run. In order to get an investment in your company, you’ll need to talk to investors and convince them to invest in your product and business strategies.
The most direct way to fund your idea is to obtain a loan. Small business loans are a great way to inject some capital into an existing business, or possibly to get your business going out of the gate. This type of funding sometimes requires a bit of legwork up front in order to make sure that the legal end of the loan is set up properly. Depending on the loan, you may need to put personal or business assets up as collateral, or you may need to have more than one guarantor sign the loan, particularly if you are not the sole owner of your business or you have bad credit. Unlike investors, lenders do not have a say in how your business is run, but they will require you to pay your loan back over time, just like any other type of loan you might be familiar with.
If you have the capital to start your business on your own dime, you may want to consider doing so. Investing your own personal money into a new company is always a risk, even when that company is your own and one that you believe in. Even great ideas sometimes fail, so if not getting a return on your money will cause you a lot of financial hardship, it might be a good idea to seek other options. On the other hand, if you can part with some of your savings, or safely utilize your personal assets in order to fund your business, you could also see a huge return. After all, if you are the only one who pays in, you are the only one who gets paid out when your company starts to make a profit.
Depending on the type of product you are working on, you might be able to use a crowdfunding service, or even word of mouth, in order to get some funding. If you use this method, your future customers will invest small amounts of money into your idea, potentially allowing you to fund production. This is a little less reliable than other methods, since you have to have a much larger number of people interested and willing to part with their own money in order to fund a launch. However, they generally do so either with no expectations other than the opportunity to purchase your product, or in exchange for limited editions and other exclusive merchandise you can offer, meaning you neither have to pay back a loan, or give up a portion of your profits to an investor.
Whatever the magnitude and scope of your business idea, you will need funding in order to launch. Using one of the methods we covered or several, you should be able to get any great idea ready to launch.