Entrepreneurs always find it challenging to get adequate funding for their new business ventures. Some of them may not even know the various finance options available to them. And many startups have failed due to a lack of finance. Here are some of the ways to finance your new business venture;
#1. Business Credit Cards
One of the easiest ways to finance your new venture is through business credit cards. It’s effective, and you can use this financing method to build a six-digit business.
Don’t make the mistake of relying on your savings to finance your startup. It could be detrimental to your business.
But, if you leverage your business credit cards, you can borrow money from the bank to scale your business.
Some entrepreneurs have created successful businesses by taking advantage of business credit card loans. They offer more credit limits than your personal credit cards.
When you use business credit cards to finance your new venture, you have the opportunity to build your business credit score.
Surprisingly, most business credit cards offer a 0% interest rate. And this is a benefit you can never get when you use your personal credit cards.
Now you understand why I earlier said that relying on your personal savings to finance your new venture could be detrimental to your business.
Read Also: 7 Smart Tips to Manage Your Financial Life
#2. Venture Capital
Venture capital is one of the most effective ways to finance your new business venture. In venture capital financing, investors will provide funding to your new business venture once they observe that it has long-term growth potential.
Most venture capital comes from wealthy investors, investment banks, and other financial institutions.
Before you can attract venture capitalists, you need to have a well-organized structure for your startup. Your business plan must be detailed and contains the financial forecast of the new business.
But before you accept funding from investors, try to do your due diligence. These financially stable investors are potential owners of your business. That means they have a say in your business decision.
If you entangle with the wrong investor, you may end up losing control of your company.
#3. Crowdfunding
Crowdfunding is one of the ways to finance your new venture. It’s a form of donation people make to raise funds for your needs.
GoFundMe and Kickstarter are two popular platforms for crowdfunding. So, if you are an aspiring entrepreneur, you can source funds through crowdfunding. It’s easy; all you have to do is visit platforms like GoFundMe and Kickstarter and share your funding needs.
Once you create a crowdfunding campaign, promote the donation link across several crowdfunding platforms.
Compared to venture capitalists, donors only donate small amounts of money. However, it’s not advisable to rely too much on crowdfunding campaigns to finance your new venture.
There are instances when entrepreneurs encounter serious legal issues for underdelivering or never delivering on their business promises. And such legal problems could lead to your business failure.
So, try to have a contingency plan to avoid angry donors who tend to take legal actions against you.
#4. Small Business Loans or Grants
One of the ways to finance your new business venture is through small business loans or grants. As a startup, you can get counselling, contracting expertise, and capital from the United States Small Business Administration (SBA).
Most times, SBA works with different lenders to simplify the process of getting loans from small business owners.
The beauty of SBA loan programs is that they continuously offer financial advice and education to help newbie entrepreneurs run their businesses. There are instances when SBA provides investment capital, disaster assistance, surety bonds, and grants.
However, you will need to enrol for the SBA programs before you can get these benefits. But before you can register on the programs, you will provide your business plan, estimated expenses, and financial forecast for the next 5 years.
#5. Angel Investors
Angel investor is one of the most popular ways to finance your new business venture. Generally, angel investors are wealthy people who invest in startups in exchange for an ownership stake.
Sometimes, angel investors are leaders in their niche and can easily contribute their expertise, experience, and network to grow your startup.
Depending on the potential of your new venture, you can get up to $25000 to $100000 from an angel investor.
However, when angel investors risk their money on your new business venture, they reserve the right to supervise your management practices. That means they get a seat on the board of directors and an assurance of transparency.
Most times, angel investors prefer to remain anonymous. And the easiest way to meet them is to either search websites on angels or contact specialized associations.
#6. Business Incubators
One of the ways to finance your new business venture is through business incubators or accelerators. They provide support for businesses in the high-tech sector in different stages of their development.
Business incubators often invite startups like yours to share their premises, administrative, logistical, and technical resources.
For instance, you can use an incubator’s laboratories to develop and test your new product before starting full-fledged production.
Your business can be in the incubation phase for about two years to ascertain its viability. Once you confirm that your product is viable, you can start your full industrial production.
If you can get business incubators to support your startup, you can operate within state-of-the-art infrastructures like biotechnology, information technology, multimedia, industrial technology, etc.
These are some of the ways to finance your new business ventures. With these strategies, you can easily get enough funds to run your startup.
