Many people are turning to startups to make their dreams come true in a bad economy. However, while passion for your business and motivation to make it happen are important, nothing is possible without the money to fund it. And so, it’s important that you know your funding options before diving in with your eyes closed.
Small Business Loans
The most traditional option – a small business loan, may seem to be fading out of style. However, The Huffington Post reports otherwise: “…Despite reports that small-business lending at banks recently tumbled to a 12-year low, there are still ways for entrepreneurs to improve their chances of being deemed credit-worthy in the eyes of bankers.” Before you can go apply for a loan however, you need to consider a plethora of prerequisites.
1. Comprehensive business plan: A bank will need to see that your business is thought out, has a plan to eventually make money, and is a viable business in general.
2. Assets: Assets guarantee that bank that you have some way to pay them back if all else falls apart. You’ll want to calculate what you have in assets, both business and personal.
3. Credit: Check your credit report for any errors. Also be sure that you’re doing all you can to keep the score at an average or above average place. Find out where you might be falling short and get your credit up to speed. You should look into this at least 6 months before going to the bank to give yourself enough time.
So your business is ready to go but you don’t have the funds to buy a space or the furniture needed for your future employees. Though you’re excited to get everything purchased and in place right away, you can also consider leasing the furniture and space that you need for a temporary fix.
1. Office space: Renting an office space gives you the opportunity to grow and move. What you need now will be much smaller than what you need in a year. Start small, and purchase space when the funds are there.
2. Furniture: Leasing furniture is a smart way to control your cash flow while having everything you need. Set up an interest/payment schedule; just make sure you can make the necessary payments.
The digital age has made starting a business a much easier task than it was 10 years ago. One way to utilize this new technology is to use crowdfunding. This technique allows you to collect money from various people, whether they’re small-time investors, family, friends, or random people who believe in your cause. To make this effective, you want to prove your business will indeed be a success.
1. Find a platform: There are a number of crowdfunding platforms available to you. Some sites to choose from include ChipIn and Cofundos.
2. Use storytelling: This is a valuable asset to your crowdfunding; telling your business’s story in a way that makes people want to invest in you. In your plea for funds, consider WHY people should want to, WHAT their money can help you do, and HOW it will fill a gap.
Finding the right funding for your business will be crucial to the life of your startup. It’s important that you follow your dreams of being a startup success, but that all starts with funding.
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