It’s not a surprise that one of the biggest challenges for small business owners is finding the funding to start and grow their business. It’s important for small business owners to know what their funding options are. To help you get your head around the different ways you can finance the growth of your business, we’ve compiled five ways to start the process!
Seek the help of family and friends
Talk to family and friends and ask for them for help in starting your business by investing in you. Make sure they understand the risks in starting a business and make it clear that their return on investment will likely show only once your business becomes profitable. Always stay professional and communicate clearly, realizing that preserving your relationships with friends and family is just as important as your business opportunity.
Harness the power of crowdfunding
Crowdfunding can be a huge benefit to any business if your idea is relatable to a large number of people. Services like Kickstarter are built around creating funding for a specific product or creative idea, so you’ll need to iron out your business plan prior to execution. Kickstarter also works great with the family and friends angle, because they can donate to your project, increasing your odds of getting funding. Another positive? Kickstarter funding allows for a wide pool of small investors without many restrictions!
Look above for “Angel” investors
Do you believe in angels? With approximately 250,000 high net-worth private investors in the US who fund more than 30,000 small businesses each year, you might be seeing wings! “Angels” have earned their name by being friendly and patient about their investments and by providing their business wisdom and valuable relationships in tandem with the cash. Angels often invest in groups, each taking a piece of the deal.
Consider a bank loan
Get a bank loan if you can. As you run your small business, you will need bank loan money to help you add new products, enter new markets and expand sales. Many small business owners, particularly when they are starting their businesses, may not have sufficient collateral. If you have it, getting a bank loan is an important option to consider.
Check in with your local government
It is possible for small businesses to get grants or low-interest loans from either local or state governments. Owners of small technology-focused companies have a distinct advantage when it comes to receiving this type of funding, however, that does not mean that owners of other types of small businesses cannot apply. Contact the economic development agency in your state to find out the first steps you need to take to apply for this type of funding.