Starting a business comes with many obligations, responsibilities, and planning. There is also a lot of research which needs to be conducted, including content strategy planning, market research, target audience, threats and opportunities, and many more.
However, before you can even begin to think about these factors, you need to think about the one crucial ingredient in order for your business to even take its first steps - funding.
Traditionally, bank loans tend to be the first thought for those looking for capital to start their business. In many cases, this might be a reasonable and efficient solution for you. Nowadays, however, people have been taking advantage of using more creative yet still realistic ways of raising capital.
If you are starting a business and looking for ways to fund the initial investment and capital into the business, we are not saying that you SHOULDN’T take a bank loan, we are only going to show you 5 other more creative ways you you can fund your new business.
1. DIY (do it yourself)
We know you might be thinking this is not exactly a creative way to fund your business, but there are in fact creative ways of how you can find the capital yourself to fund your business.
One option worth laying on the table is selling some of your assets. Of course, we are not suggesting selling and risking everything you own just to fund your business, but selling some of your personal assets is an easy way to raise capital. Before doing so it is important you consult with a professional or advisor, but liquidating your personal assets such as cars, stocks, valuables, property etc. is one way you can find the money to invest as funding in your business.
There are a number of different ways you can personally find the funding for your new business, without going to external sources. These ways include anything from saving on unnecessary expenses in your personal life, to taking on another job to earn and save more.
Maybe it's time you start spending those savings you have been safeguarding for years! Investing your own money into any new business can be scary, but if you truly believe in your business then you should also feel comfortable enough to invest your own money in it. In turn, other potential investors will be more confident in investing in your business if they can see that you too have skin in the game.
2. Friends & family
If you are looking for outside sources to help you fund your new business, what better place to look than to your family and friends? After all, these are the people that should be most supportive of you, and therefore your business.
Your friends and family are probably the people who should believe in you and therefore find the motive for wanting to invest in your business, and this motive is to help you succeed and also be a part of your journey.
You can either ask your friends and family to for a business loan, or you can offer then a share in the company. Keep in mind that if you decided to go down this route, then all deals and decisions should be documented in formal writing for legal purposes.
The only risk you also need to consider is that using your family and friends as a source of finance for your business does come at a cost. If, for example, things do not go as planned, you are risking that a good relationship can be at stake.
You might be thinking that loans are not exactly the most creative way to fund your new business, but there are a number of different types of loans. When starting a new business, taking a microloan might be the best option for you.
Microloans are small loans that is normally used by businesses who might not qualify to get a traditional loan from banks. There are several microlending organisations and private companies that offer small loans to help support businesses in need.
Crowdfunding is a pretty recent and modern approach to business finance. Crowdfunding is a method used to raise capital to start a business or project through collective efforts.
Crowdfunding allows businesses to pool together smaller investments from different individual investors rather than seeking out one primary investor.
Crowdfunding works through online platforms such as Kickstarter, where you can pitch your business idea, and like-minded people who are willing to support your efforts can each contribute to raising capital with small amounts. You start by setting a setting a goal of how much money you would like to raise over a period of time, and then anybody from family and peers to strangers can back your funding through the site.
5. Angel investors
The concept of angel investors is similar to that of crowdfunding. The term ‘angel investor’ refers to anyone who invests his or her money in startup companies or entrepreneurs, in exchange for an equity ownership interest in that company.
Just like crowdfunding investors, most angel investors are not motivated solely by profits. Angel investors are generally equally motivated by the sole enjoyment of helping startups succeed.
Typically, angel investors invest their own money into startups and usually bring more than just their finances to the company. They are also known for helping companies grow by sharing their own experience, knowledge, and contacts.
Depending on the angel investor, it can either be a one time investment, or even an ongoing injection of funding to help carry the business through the tough times.
Choosing what’s right for you
While these are just a taste of some creative ways you can find funding for your new business, there are so many different roads you can choose from. It is important that you do what you are most comfortable with, and what is suitable for your needs.
There are hundreds of good people out there who are interested and willing to support your business idea. If you are passionate enough about something and truly believe in yourself, then you can easily convince others to believe in you too!