If you are someone with a great business idea in mind, you are not alone. There are hundreds of thousands of people in the world who think about starting a business every day. However, all of these people have hurdles and hindrances to face when it comes to making their dream a reality. The biggest issue for any entrepreneur or aspiring business owner is business funding. Of course, you can’t start and run a business if you don’t have the money to. Furthermore, it does not matter in how many ways people try to convince you otherwise, funding is critically important for any business.
The best thing is that you now have many additional ways to arrange the business funding than you had in the past because of the internet. Let’s take a look at some of them.
Many Ways to Arrange Funds for Your Business
From Family and Friends
The first source of funding your business is your own family. If you don’t have anyone in your family who can support you with your business ventures, you might want to find a friend. When it comes to arranging funds from family, you might come to a point where you have to make the financer a partner in your business. If you find value in them as a business partner, go ahead and be a partner. However, if you think the partnership would not work, do not go for it just for the sake of accepting the funds.
The problem with funding that comes from the family and friends is that it is often very limited. If you are thinking about an idea that requires a lot of money, this type of business funding might not be sufficient. For example, creating a complex mobile application can easily require enough money that is not easily available in the family.
Bank loans are some of the most common types of loans. The first entity that comes to people’s mind when it comes to business funding is a bank. Banks can forward you loans and there is no cap on how much money they can give you for your venture. However, the biggest issue with bank loans is that they are not easy to obtain. Not to mention, you might even have to face some strict regulations on how you will have to return the money. With family and friends, they can give you a lot of flexibility. Banks would often require a lot of documents from you.
They will always look at the credit history of the business. If you are a small business or a startup, you will find it very difficult to convince the bank to forward you any type of loan. That’s because banks want to see some credit history to establish a point of trust to forward you loans. The bank wants a guaranty that you will be able to return the amount you have borrowed. Bank loans are not the best way for news businesses to arrange the funding.
Through Invoice Factoring
If you are a small business and you are looking for money for expansion, you have many ways of arranging the funds. Business funding for entities that have been around for some time is not that difficult. One of the ways to make arrangements is invoice factoring. In this particular method, you use your unpaid invoices to arrange the business funding. There are lenders who are built on this particular business model. They will get the invoices from you, take the responsibility of collecting the pending payments, and hand over the cash to you instantly.
Of course, there will be a service charge for you to pay. Not to mention, you will not get 100% of the amount of your invoices upfront. The issue with this type of funding is that your clients will know that you have arranged funds in this manner. They might think you are having financial issues, and that can put them off.
Crowdfunding has emerged as one of the best ways to arrange business funding in the modern times. This type of funding has been around for years but internet has made it much simpler than before. Today, you can start an online campaign to arrange the required business funding and investors from around the world who find value in your idea will invest in it. There are several online platforms that you can use to start a crowdfunding campaign. You can also arrange the funding for your business in the form of an ICO. However, an ICO depends on the nature of your business and product. The good thing is that you can arrange millions of dollars with the help of an ICO.
Again, the best thing about arranging business funding using this method is that you are not bound to return the money on a strict schedule. You might not even have to return the money at all. Many businesses choose to return the favor from their investors in the form of sending them the first samples of the products or giving them early access to the product if it is a software or application. The biggest challenge with this type of funding is coming up with a pitch that would convince people to invest in you.
How many options you have for business funding depends a great deal on the amount of research you do. You can even get in touch with institutions that provide loans despite the size and nature of your business. For example, there are companies specializing in giving loans to high risk businesses. Your options are only as limited as your exploration and imagination. In the end, you also have to pay attention to what you are putting on the line for getting the investment you need. If it comes down to giving a share of your equity to the investor, be sure to set a starting and ending point of how much equity you will offer. Do not make decisions under pressure. If investors want equity in your business, it is a clear sign that they see a potential of growth in your business.