America should be renamed the land of the free and home of the brave small business owner. Why?
Because there are 30.2 million small businesses operating around the country right now! That’s a whole lot of entrepreneurs who’ve ditched their 9 to 5s to pursue a business idea instead. In so doing, they’ve bid farewell to the security of a salary, taken a risk, and bet the house (sometimes literally) on a dream.
If you’ve just done the same, then the minor issue of securing startup financing is probably high on your list of priorities! After all, your savings won’t last forever and capital is king when it comes to business growth. When you’re new to the game, though, the tricky bit’s knowing how to get your hands on it.
Want some help with this crucial part of the new business process? Check out our brief guide to startup business financing and learn everything you need to know.
Create a High-Quality Business Plan
All aspiring business owners should begin their journey by putting a thorough business plan together. These documents provide a blueprint from which to proceed. They detail your financial goals, realistic time-frames, competitor analyses, potential risks, USPs, and financial requirements, among others.
As a result, you end up with a newfound understanding of your industry and a well-honed strategy that boosts your chance of success. At the same time, you create an invaluable asset for securing startup funding! Any serious and reputable lenders you go to will ask to see your business plan and base their decision on what they read.
Leverage the Bank of Trusted Loved Ones
Acquiring investment from traditional lenders can be a challenge- especially when your financial standing could be better! That’s why many new entrepreneurs turn to their friends and family for support first. Now, it can feel awkward to ask your loved ones for money, but swallowing your pride and taking the plunge offers numerous advantages.
First and foremost, they’re the cheapest loans you’ll ever receive! Your friends and family love you, which means they may give you the money interest-free.
Another benefit is the time it takes to acquire the cash. You can have the capital in your account moments after having the conversation and agreeing upon terms. Throw in the lenient repayment schedules (compared to those you’d get from the bank) and it’s no wonder this form of debt financing for startups so popular.
Improve Your Credit Score
Getting a loan from your friends and family is a great starting point as far as finance goes. Yet the money they provide won’t last forever. Likewise, they might not be in a position to help out in the first place.
In both instances, traditional lenders often become the next port of call. And that’s when your credit rating starts to count! They’ll look at it to determine:
- Whether or not to offer you the loan, and
- The rate of interest you’ll pay if the answer’s “yes”.
Bad credit can spell trouble. Imagine going to a business financing company website, such as https://alto-capital.com/, applying for a loan, and being turned down because your credit isn’t good enough. There’s nothing more frustrating!
That’s why you should focus on improving your credit rating ASAP. Begin by acquiring your credit report to see what you’re dealing with. Then correct any mistakes, pay down your debts, and avoid late payments at all costs.
Don’t Forget About Crowdfunding
Do you know who doesn’t care about your credit rating? The world! And that’s one reason crowdfunding’s such an impressive alternative source of capital.
This model of funding is simple yet powerful. Rather than asking one wealthy source for a big lump sum, you leverage the masses to bring in hundreds of mini-investments. If you can tell a compelling story about your product/service, spread the message, and get enough people to buy into the idea, then crowdfunding can and will generate huge sums of cash.
Kickstarter, GoFundMe, and Patreon are a few examples of crowdfunding sites to try. Set up a profile on any (or all) of them, create your campaign, and then start marketing the cause. Oh, and remember to sweeten the deal by offering incentives (such as branded products and access opportunities) for contributing.
Perseverance Is Imperative
Acquiring the startup financing you need can take time, effort, hard work, and a healthy amount of rejection. Don’t give up, though. Remember, where there’s a will, there’s a way!
One sensible strategy to employ is to seek feedback from any lender who rejects your application. Your presentation might need reworking, for example, the idea itself could have flaws or the risks involved might be too high to justify investing. Whatever the situation, if you can find out why they said ‘no’, you can take action to alter course and improve your chances next time.
Why not ask for referrals to other lenders while you’re at it? The individual or company in question might not be in a position to finance your idea. But they might know someone else who’d be interested.
Remember This Guide to Startup Financing
Being an entrepreneur has never been cooler than it is right now. More startups are hitting the scene than ever before, adding to the tens of millions of small businesses that already operate around the United States. But don’t be fooled…
Starting a new business is both difficult and expensive! That’s why acquiring enough capital to fuel your idea will be fundamental to success for anyone planning to drop the day job or start a side hustle. With any luck, the startup funding tips in this post will help you do exactly that.
Now, these insights into startup financing should provide a springboard to business success. If you want to learn more about how to achieve your company goals, though, search ‘business’ on the website now.