Starting a new business is one of the riskiest endeavors a person can take, but it’s also the American Dream. Taking an idea and turning it into a reality is the dream of every startup business, but how exactly do you get started? To grow your startup business, the first thing you have to do is find funding to get it up off the ground.
Once you’ve begun attracting customers, you’re up and running. Investors are much more likely to invest in a company that’s already got some traction than one that’s still in the planning stages. If you can secure a small amount of funding in the beginning and get past that initial hurdle, your startup has a much greater chance of success. Here are just a few ways to find initial funding for your startup:
Use Your Personal Savings
If you want someone else to invest in your vision, you have to believe in it yourself. If you’ve got a savings account that you can afford to tap into, invest a little in your own business. Having some of your own money in your startup will help you to be more cautious with your riskier endeavors and will also give you greater control over the direction of the company. While you will definitely need additional sources of outside funding, investing some of your own money is a great start.
Take Out A Credit Card
Credit cards can be a great way to add a small cushion of cash for your start up, but be wary. Going over your credit limit or paying your bill late can ruin your credit, hurting your business in the long run. If you choose to use a credit card to help fund your startup, make sure that you’re sticking to the credit limit and paying it off each month before you start collecting interest.
Any extra expenses should not come from your credit card, but should be taken from other sources. If you’re cautious with credit, getting a credit card can be that extra little boost your startup needs to reach the next level.
Is your startup something that can begin attracting customers right off the bat? If so, crowdfunding can be an excellent source of money to grow your startup. Sites like Kickstarter can help you raise money for your startup by setting a monetary goal and offering pre-ordered merchandise to people who pledge money to help you achieve that goal.
You only receive the money if you achieve the goal- ie $20,000 in 90 days- so be creative. Offer personalized incentives and premiums for higher contributions to make people want to donate more for exclusive prizes. Crowdfunding is an excellent way to gain exposure and quick funds for attractive startups.
Get An SBA Loan
The U.S. Small Business Administration (SBA) is an excellent resource for any startup looking for funding. Their 7(a) loan program was created to help people start new businesses, and they offer a variety of other micro loans and grants that you can apply for as well. They also offer many tools and online resources for startups looking for funding, so be sure to take advantage of all that they have to offer.
While their loan applications are a bit arduous and time-intensive, the SBA is a great resource for any startup. Applying for a loan with the SBA while pursuing other funding options is an excellent way to ensure you have all of your bases covered.
Have Your Friends And Family Invest
Many startups begin with funding from friends and family. Your closest network of friends are the ones who know you the best and are most likely to believe in you and your ideas, so they may be more willing to invest than you think. Even if it’s just a small amount, if enough of your friends invest in your business it may be enough to attract some larger investors.
Just be sure to clearly document the investment to ensure that there is no miscommunication. The biggest danger from seeking investments from friends and family is the possibility for damaged relationships or hurt feelings due to poorly structured agreements or a failed business endeavor. Protect your investors and yourself by clearly delineating the agreement with everyone involved.
At a certain point the best thing you can do is get out there and start making sales. You can attract investors all day, but eventually you’re going to need customers to start paying for your product in order for those investments to pay off. You may be surprised how quickly you can start generating revenue if you invest your time looking for paying customers instead of looking for more funds for your startup.
Do everything you can to attract customers: make cold calls, advertise on social media, and network as much as you possibly can. If you can find a regular base of customers willing to buy your product or services, your startup will grow exponentially. The more funds you acquire via revenue the more successful your business will appear to investors and the faster you’ll grow. A healthy, thriving business is a lot more attractive to a wealthy investor than one that has yet to make its first sale.
Keep A Part-time Job
A big mistake that many startups make is diving in without fully understanding the costs and expenses that come with beginning a business from the ground level. While you may have enough savings to help you last, startup costs may be greater than you think. Consider keeping your day job, or going down to part-time to continue bringing in revenue while you grow your startup.
The option to go all-in will always be there, and if worst comes to worst you’ll still have something to fall back on. Give your startup the best chance possible and make sure you’re taken care of. After all, if you’re not financially stable, your business can’t be either.