Getting a small business start-up successfully off the ground has always demanded creativity. Entrepreneurs seeking business success in today’s economic landscape have more resources available than ever before to help see their business to fruition. Information is readily accessible, consumer-level technologies are affordable and more than capable of handling small business use, and the internet has provided an extensive, inexpensive new platform to operate within. Considering all of the above, it may sound like launching a small business is easier than ever, but one vital resource still remains elusive, and that is funding.
Seeking funding for a small business opportunity used to be simple, albeit still somewhat difficult. Bank loans were more common, and small businesses didn’t require as much reach in order to achieve success. Today, however, banks are particularly stringent with small business loans, and even the best business plans are often turned away due to unestablished credit. Thankfully, modern innovations have allowed for more diverse funding options, many of which provide several benefits not available to more traditional funding paths.
Before seeking any funding, it’s important to understand that self-funding and personal investment is required no matter how you intend to receive additional funding. Investors and lenders of any kind expect small business operators to have a personal financial investment in any business venture that requires additional funding, and without personal investment, most funding avenues quickly close themselves off for a variety of reasons. With all of that in mind, below we’ll look at 4 possible funding avenues worth considering for your small business ventures.
The advent of the internet and its near universal adoption as an essential service has led to the development of several uniquely effective funding strategies unavailable to businesses in the past. Among the various new avenues that have popped up, crowdfunding has become one of the most well-known and best ways to seek funding for small businesses.
Crowdfunding works essentially through raising small amounts of money, from a much larger pool of possible investors. Successful crowdfunding campaigns require good exposure and the ability to display the capabilities needed to see a project through to completion, and of course a strong business plan. Achieving a high degree of exposure may seem like a difficult challenge for a broke startup, but several popular crowdfunding platforms exist which help to provide the necessary exposure from the beginning.
2. Bank Loans
Although bank loans can be difficult to acquire and come with their fair share of difficulties, some entrepreneurs should still consider them as a viable option. Start-ups with access to good credit, combined with a good business plan, can still tap into funding from many banks today. Although the loans may be less significant than in the past, bank loans can be easy to understand and require less exposure or overwhelming risk than many other funding routes.
3. Family and Friends
Seeking investments from friends and family can be an intimidating prospect. Loans always carry a degree of risk with them, but loans from those close to you carry the additional risk of damaging long lasting friendships and family relations. Although the risks are there, seeking smaller investments from those close to you can be a good idea when the terms are laid out clearly, and the business plan is clearly explained. When done right, these types of loans can provide an overall safer method of acquiring capital, and provide a healthy dose of motivation as those who are close to you have placed their trust in your hands.
One of the best ways to achieve funding for many startups is through a small business grant program. Many government organizations, investors, and educational facilities provide access to small business grant opportunities. Grants are attractive not only due to the funding they provide, but because many programs also offer additional professional assistance from business veterans. The added professional experience and guidance can be a deal breaker for breaking down business barriers and achieving success, so always look into grant opportunities before committing to any other funding strategy.
The business financing strategies represent some of the most common, but effective ways to generate funding for small businesses. There are countless other possibilities available, and even among the 4 touched on here, there are several ways in which each strategy can be approached. If you’re an entrepreneur with a viable business idea and the will and ability to see it through, funding is out there, it just takes dedication to tap into.