Creating a startup from scratch is never a piece of cake. If you have ever done live trading, just so you know, starting a business takes more effort than making profits out of a small investment. Experts have a consensus on the fact that business startups often capitulate within the first year because of lack of capital.
Capital is the basic ingredient for a business to thrive. Without adequate finance, your business tends to crumble. If you are looking for funding options to start a business from scratch or to pump an existing one, try these funding options:
- Tap Onto Personal Savings
The easiest way to finance a business is to use the funds in your piggy bank. Using your own cash is a popular way to start a business. It also demonstrates your commitment as a business owner to other potential investors. This will help you win additional funds later on, too.
If you have a life insurance policy, consider borrowing against it. The approval process is fast and easy. Loans like these must be repaid within 5 years. In case you don’t have enough savings or a life insurance policy, move on to the next option:
- Consider Crowdfunding
Crowdfunding campaigns such as Indiegogo and Kickstarter have received a huge uptick over the past 5 years. They are very helpful for product-based companies especially if there is some innovation. Basically, you pitch your business ideas to people who are willing to support your idea/cause and even community of investors. If these individuals like your idea, they might donate generously. So, do your best to convince them that your idea is full of potential.
- Get A Bank Loan
There are chances your idea gets rejected and you have to cross crowdfunding from the list of options. If that happens, consider applying for a bank loan. Lots of financial institutions are willing to provide loans to businesses with a solid plan.
- Use Income From A Side Hustle
You can also use a side hustle for funding your business. If you are good at something such as designing, coding, writing, data science or more, look for gigs and make some money. Use that income to fuel your business.
- Borrow From Friends And Family
When you are just getting started, your friends and family might be willing to provide you funds to fulfill your dreams. Some are ready to offer loan while others consider it a stock purchase.
To protect your relationships, it is recommended to have a clear written agreement outlining how much you are borrowing and when will you pay back. If you have the slightest doubt that borrowing money can damage your relationships, in the long run, it’s recommended not to for this option.
- Find An Angel Investor
Angel investors are accredited individuals having a net worth of more than $1 million. They usually operate alone but some work in teams too. In any case, an angel investor can be a great source of capital for a business. However, for that, you will need a solid business plan and a great pitch, of course.
You have to make them convince that your business has future potential. Finding one may not be easy but there are resources that can help you with it. The best thing about angel investors is that some of them are willing to offer mentorship along with providing capital. If they anticipate a good return on investment for your startup idea, they are willing to take risks too.
- Organize A Garage Sale
Are there any prized possessions sitting in your closet? What can be a better time to sell them than this? While selling such precious item can be hard but you are doing this for your business. If you have enough items to sell, a garage sale can gather you sufficient funds successfully.
- Use Your Credit Cards
We all have credit cards, right? So why not use them? This would an easy way to finance the items you need to launch your business. Keep in mind credit cards come with interest rates. If you aren’t able to pay the outstanding amount on time, you will be charged with a fine. This will also affect your credit score.
To be honest, before your business generates enough revenue, it can be difficult to pay the monthly installments on time. So, make sure you have some source of income to keep up with those payments. If you are planning to use a credit card to fund your business, use the ones with cash back programs or rewards for business purchases. It’s wise to look for such cards that have low or 0% APR.
Putting together finances for launching a new business takes serious planning and effort. Pick those sources that offer the greatest flexibility at the least cost. It’s possible you won’t be able to gather enough from one source. If that’s your case, don’t hesitate in using multiple funding options to raise just enough. Perhaps you can try your luck by investing in CFD stocks of a famous company.
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