The mere idea of a brand new small business is enough to leave a forward thinker daydreaming. Ambition is something of an addiction, and is more than enough to continually get people out of bed every single day, no matter the hurdles ahead of them.
However, the hurdles in front of a possible small business owner are pretty significant. For instance, funding the start to a dream is a pretty hefty task, but how exactly does one go about doing that? Let’s take a look at five solid financing options that every small business should consider when starting out.
This entry may sound a bit cold and a little harder or patient than the rest of our entries, but it is a safe and logical choice when mixed with care and caution. By simply saving up over a period of time, or even selling off unneeded assets, a “bootstrapper” can simply finance themselves, as long as they’re willing to wait out the time it takes to save up and sacrifice in the name of their dream. However, if you aim to take this direction, you had better bring your best game possible, else you risk losing significant time and money in the long run
2. Small Business Loans
One of the more common directions that people will take when searching for funding of their small business is to get a loan. Provided that you can turn enough of a profit in your business, this is generally a good route to take in order to secure financing. Of course, there are a few things you will have to do in order to prove that you are trustworthy enough to accept a loan, but with enough patience and can-do attitude, the vast majority of people will be able to get a loan sooner or later.
3. Personal Connections
Loans can come in all forms, as do the people that provide the loan. Some folks may not feel incredibly comfortable with the concept of their fate resting in the hands of a stranger who may not have their best interest at heart. For these people, there may be a way to find a loan from someone as trustworthy as friend or family. Naturally, this comes with it’s own risks, as the personal connection itself may be at risk if the business plan goes south.
4. Angel Investors
While a loan company may seem a bit untrustworthy sometimes, and a family loan may feel a little too dangerous, there is another way to ensure that your finance source has your success in mind. This is accomplished by mixing your interests with theirs, naturally. An angel investor will have a personal stake in your success, as your victory will stand to benefit them in the end. Of course, using an angel investor may come at the loss of a portion of your business. If you’re willing to comprise in that way, then this may be a great option for you.
There have been a significant amount of wonderful projects that were only possible because of crowdfunding. Of course, crowdfunding doesn’t work perfectly every time, but it may just be the push that you need to get yourself off the ground. The risks with this option, on the other hand, lie in the openness and sense of vulnerability that come with the publicity of a developing idea. This can lead to possible idea theft or the loss of important intellectual property that can harm your future business. It may be a good idea to have some legal protection backing you up before you attempt crowdfunding.