5 Traditional Options for Funding Your Startup

Do you dream of starting a small business? It’s a common goal for many. Some believe their product or service will change the world while. Others desire more flexibility or the freedom to steer their own ship. Regardless of why you may want to launch your startup, chances are you’ll need the funding to get the train rolling. But pooling resources is sometimes easier said than done. So, here are some options to consider:

1. Bootstrapping

If you’re not familiar with the term “bootstrapping”, you may want to get acclimated as it may be your only option for now. It simply means self-funding your own operation and reinvesting earnings into your company until you can prove to lenders or investors that you have a sustainable business model worth taking a risk on.

But how exactly do you bootstrap? You can trim excess spending from your personal budget and allocate resources to your startup, take money from your savings account, use credit cards, take out a home equity loan or borrow against assets you have in your possession. Keep in mind that some approaches are riskier than others.

2. Take out a loan

If you prefer to borrow the funds to launch your startup, there are several lenders to choose from. But, securing a small business loan can pose major challenges for new business owners. Many lenders have stringent qualification criteria. And if you do find a lender that caters to up and coming small businesses, they may rely on your credit score to make a decision.

So it may be in your best interest to secure a personal loan without as the barriers to entry may be lower. Before you apply, check out reviews from various lenders.

3. Crowdfunding

Have you considered launching a crowdfunding campaign to raise capital for your startup? The idea of asking strangers for funding may be daunting. But it’s a free way to reach hundreds, if not thousands of potential investors without spending a fortune. Plus, you’ll be offering an incentive in return for their investment, so it’s a win-win for both parties.

4. Angel or venture capital investors

Are you willing to sell a percentage of your company to raise the funds you need? If so, an angel or venture capital investor may be ideal. They’ll expect to make a profit off of what they invest. But you may be able to cut ties once your company is profitable and they’ve turned a profit on their investment.

5. Friends and family

The support of friends and family is a definite plus when launching a startup. And if you get the sense that they’d be willing to go the extra mile to help your company succeed, consider asking for a small investment. It may be the capital infusion you need to boost profit margins in record time. Plus, it could garner the attention of other potential investors.

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George Meszaros is the editor and co-founder of Success Harbor where entrepreneurs learn about building successful companies. Success Harbor is dedicated to document the entrepreneurial journey through interviews, original research, and unique content. George Meszaros is also co-founder of Webene, a web design and digital marketing agency.
2017-09-13T16:37:26+00:00 September 6th, 2017|Articles, Business Finance|Comments Off on 5 Traditional Options for Funding Your Startup