How to Get Funding for Business through 7 Proven Steps!
The Executive Headlines
Imagine this scenario. You have a billion-dollar business idea and you want to get started with it as soon as possible. However, you cannot stop worrying about how to get funding for business?
Several entrepreneurs fall out of the market due to a lack of financial assets. In the present times, having a big and billion-dollar idea for a new company or startup is great. The only things you need are a website, a tech team, some office space and essentially, enough cash or funding coming in each month to pay your bills.
Be it a new problem-solving technology or a game-changer app, most businesses and entrepreneurs require at least a little amount of funding to get started off the ground in their early days. But, do not worry since we have got you covered. In this blog, we will cover how to get funding for your business and what procedures you should keep in mind while seeking out investors.
7 Ways to Get Funding for Business
1. Start with Bootstrapping.
When first getting started, many entrepreneurs use “bootstrapping,” which means financing your company by scraping together any personal funds you can find. This typically includes your savings account, credit cards, and any home equity lines you may have.
In many cases, using the money you have instead of borrowing or raising is a great approach—in fact, some entrepreneurs continue to bootstrap until their business is profitable. This can be beneficial because it means you won’t have extensive loans and monthly payments that bog you down, especially if you run into snags along the way.
2. Consider Friends and Family.
Asking your friends and family for money might seem like a daunting prospect—but tapping those closest to you is often a good first step before getting external funding.
Before you ask your friends and family for money, though, you should have a business plan at the ready. This way, you can explain to them exactly what you’re selling, what you plan on charging, how you’ll make money, and whether you’re asking for a loan, an investment, or a gift.
3. Explore Alternative Funding Sources.
If you’re looking for a relatively small amount of money (anywhere from $25 to $5,000), there are quite a few micro-loan organizations that lend to start-ups and entrepreneurs, such as Kiva and Accion. These websites cater to low-income entrepreneurs in the U.S. or those working for social good. But if you think you might qualify, check out their websites for more information.
4. Seek Local Opportunities.
If you’re launching a small company (vs. a tech start-up that you see as the next Facebook), you’ll definitely want to check out your local small business development center. Many universities have one, and the Small Business Administration (SBA) alone has 63 across the country.
Not only can these centers help connect you with groups of entrepreneurs for networking and angel investors for funding, but they can also help you determine what type of loans and funding you might qualify for and help you apply. Your local chamber of commerce may also be a treasure trove of information and guidance in terms of where to get local funding. Many large cities have programs and organizations that exist solely to bring business into the local community.
5. Consider Taking Out Loans.
If you can show that you’ve started gaining traction and making money (and that a loan would help you earn even more), you may be able to qualify for a traditional bank loan. Many banks, such as Bank of America and Wells Fargo, have recently announced an increased commitment to small businesses. While each bank and individual situation differs, this may be a good bet if you’re looking to find funding between $5,000 and $500,000.
6. Seek Out Angel Investors.
A good place to start is angel investors, usually established business professionals with high net worths who are looking to invest in promising companies. Typically, an angel will invest anywhere from $10,000 to a few million dollars.
To find angels, ask other entrepreneurs in your network, or check out the Angel Capital Association, which counts over 330 angel investor groups nationwide. You can also look at AngelList, a website that helps entrepreneurs make connections with interested investors. So far, the site has helped more than 1,000 start-ups get funded.
In addition to making direct loans, angel investing groups sometimes host events or competitions that can help provide new entrepreneurs with additional networking opportunities. Check your local community for these groups.
7. Venturing into Bigger Capital.
VCs typically invest in a few different companies for their clients and hope to make money off of one (or all) of them to pay back their client’s investments. What that means for you is that they see all kinds of businesses—and you have to make yours stand out.
The best way to get meetings with VCs is through introductions from other entrepreneurs or investors—which means that if you’ve decided to solicit VC money, it’s time to leverage your contacts (and their networks) to see who you can talk to. It’s more of a gamble, but you can also browse the National Venture Capital Association website and pitch your business to the ones you find a connection with. While cold-calling a venture capitalist may not be the easiest feat, it’s somewhere to start.
The above-listed methods can definitely help you earn funding for business. Finding funding can be the hardest part of getting your business off the ground, but also the most rewarding. Though it can be a long road to success, finding allies along the way (whether they’re friends, angel investors, or venture capitalists) to help keep your business afloat can make all the difference in the world.