Do you have a groundbreaking business idea? Of course, you have. Why would you even start reading this article without having one? The reason why you’re here is that you’ve just realized that to pursue your dreams, you need one more thing – the money.
Without them, you’re just the guy with an idea. And if you hope for another rag to riches story, we hate to break it up to you, but the chances are you’re not another Bill Gates. In fact, even he wouldn’t be where he’s now without proper funding.
That brings us to our next point. How can you get the right amount of money to turn your idea into a real venture? As you probably remember, there are two types of funding you can follow – equity and debt.
But since you surely already know that, let’s cut to the and get to the article’s main point. Where should you seek financing to set up your first business in 2020?
That, considering the pandemic, might be even more challenging than usual, with banks being much more reluctant to give out loans.
Have you heard of the term of an idea so crazy that it might be brilliant? Funding your new business with gambled money is the perfect example. We don’t recommend it on the record, but since you’re already here, we have an obligation to at least mention it.
But since most casinos are closed because of the pandemic, the only way to gamble is by doing it online. For some, online casinos still seem abstract, despite them being around for a couple of years. Still, it’s your only option at the moment.
You can click here if you’d like to learn more about the best online casinos and how they work. And again, it’s just one way to seek money. Is it the best idea? Definitely not. Still, it’s worth mentioning.
Financing your business by yourself is relatively easy, but it requires sacrifice. Firstly, if your business fails, then you’re toast. Secondly, you will have to cut back on your overall expenses, forcing you to live a much more moderate life than you might be used to live.
Still, despite these downsides, many young business owners decide to self-finance their ventures. They find this way most reliable, and since it’s their hard-earned money, they aren’t dependable to anyone or anything.
Here are a few examples of how you can fund your business by yourself:
- Sell personal assets
- Tap personal savings
- Use credit cards
- Borrow against your home
- Take on a side gig
- Cash in retirement accounts
- Take a business loan
Friends and Family
If you can’t finance a business yourself, then maybe it’s time to turn for help to your friends and family. It’s actually quite common for small businesses to base their seed capital on family funding.
In fact, according to the 2016 research, more than half of small businesses fund their ventures with help from their close friends or family members. After all, they’re much more likely to grant you the capital you need since they won’t go through your current account score to determine the risk.
But as great as it sounds to seek help from your loved ones, it does come with some downsides. The most significant is that when something goes sideways, it might ruin your relationship with another person. Have you failed to repay your nana? Say goodbye to your handmade Christmas sweaters.
Look For Business Grants
Small business grants are fantastic if you want to launch your venture with a bang. They’re free, and you don’t have to pay them back, but they’re not easy to find and even harder to claim.
To find yourself a business grant, you have two options. You can either seek them from the government or private enterprises. Remember that every grant program is targeted to a different group or type of your venture, so you must do your research right.
The most significant advantage of getting a grant, and what makes it different from a business loan, is that it won’t hurt your credit score. Bear in mind, though, that they come with a set of restrictions, and you have to spend them in a particular way.
Once you fail to follow the rules, the penalty will severely hurt your business and reputation. Also, it might be challenging to find them during times of pandemic.
But let’s say that there aren’t any grants available, and your aunt and uncle aren’t rich enough to fund your business. Then, your best option is to find an angel investor. Many individuals like investing in small businesses in exchange for an equity stake.
What’s more, they often bring much-needed experience and connections to make sure your venture starts and develops well. And how to find such a person? You have plenty of options, with many dedicated websites designed to connect business angels with local small business owners.
If you want to ensure the person invests in your venture, you need to prepare a transparent and efficient business plan. What’s more, your business idea has to be unique, and you need to be confident that it’s going to work.
Another way to finance your business is crowdfunding. Over the past few years, it’s become quite popular with more and more ventures basing their capital on online fund-raises. And who can blame them? It’s a quick and efficient way to get the money you need to start a business.
That is, of course, if you know how to advertise yourself. Many crowdfunding efforts are unsuccessful, meaning you must have the ability to convince people to invest in your business. You need to make it clear to them that they won’t waste their money.
To start crowdfunding, you can use a specially dedicated website. You can also consider using your social media to create a fundraiser.
As you can see, there are many funding options you can choose from. Each one of them comes with pros and cons, so it’s crucial you do your research and pick the one that’s best for you and your business.
Keep in mind, though, that it’s hazardous to launch your start-up in 2020. With the coronavirus pandemic still wreaking havoc in the business world, you have to be extremely careful and cope with stressful situations.
The pandemic has forced many small businesses to close, and it looks like more will follow this trend. That’s why you have to ensure your business idea truly is groundbreaking. If not, you’ll never convince anyone to grant you the capital you seek.