Top 5 Ways to Get Money to Start a Business
Many of us are looking for alternatives to a regular job. The explosion of the gig economy has given people an opportunity to create their own work life on their own terms. If you’re attracted to the idea of running your own show, you’re probably wondering Where to Get the Money to Start a Business. How you can possibly get together the funds you’ll need. Here’s a guide to getting that money, including an idea that will make money for you around the clock.
How to Get Money to Start a Business
The average small business costs $30,000 to start. That sounds like a big number, but it takes into account the fact that most small businesses don’ t make much of a profit the first year. During that time, you still have to pay your rent, food and bills.
If you’re going to start a business, you need a way to stay solvent for that crucial first year.
Top 5 Ways to Find Money for a Business
1. Raise Money Through Crowdfunding
If you can make your business sound like an attractive investment option, you can find strangers online who will pitch in to fund it. Crowdfunding sites have given us a number of successful start-ups, movies, books and charity fundraisers. Some popular crowdfunding sites where you can get money to start a business include:
You will have to perfect your pitch and produce an attractive outreach campaign.
As Meredith Wood writes in MyCorporation, crowdfunding is also a good way to fine-tune your business itself. It lets you see ahead of time if there’s any interest in your business idea.
“Crowdfunding gives you the opportunity to connect with like-minded people who you wouldn’t normally be able to engage,” Wood writes. “You can gauge interest in your product and understand what’s resonating with people and what’s not. This shows you how to improve your product and your pitch. Most importantly, crowdfunding can help you raise money to fund your business.”
You may enjoy this short video about crowdfunding.
2. Get a Business Loan
Loans are a tried and true way to get money for a business. Although banks have restricted lending in recent years, there are still ways to get business loans.
Traditional loans like those from your bank or the Small Business Administration (SBA) are difficult to get unless you meet certain strict criteria. These include:
- Being in business for two years.
- Proof of high annual earnings.
- High credit score.
- Well-developed business plan.
If you don’t meet these criteria, you can still get a loan. Several companies specialize in providing loans to small businesses whose owners have low credit scores. Even for those lenders, you may still need to show proof of a certain monthly revenue.
3. Get an Angel
Angel investors and venture capitalists (VC) are not easy to find, but it’s worth taking your time to pursue them. If you have the type of business that appeals to these investors, consider this route.
Finance experts recommend the following tips to attract angels and VCs.
- Start with friends and family to get some initial revenue before pursuing angel investors for the second round of financing.
- Know the true valuation of your company.
- Don’t get taken in by so-called funding consultants. There are a few good ones, but there are a lot of scammers too.
- Don’t give up control of your business.
4. Tap Your Friends and Family
Most entrepreneurs use this method to get money for a business. Borrowing from family members may be easier in terms of your credit history and paperwork, but it’s not without its own downsides.
As the MoneyCrashers blog points out, it can be difficult dealing with your family if the business fails, as most new businesses do.
“Needless to say, borrowing from friends and family comes with its own set of risks. If the venture fails, or if it takes much longer than anticipated to repay the loan, your relationships can suffer. If you default on a credit card or bank loan, you don’t have to sit down to Thanksgiving dinner with the loan officer or credit card company. If you fail to pay back Aunt Sally, you may never hear the end of it.”
If you go this route, make it more palatable to you and your lender by making the process as professional as possible:
- Have a sound business plan with realistic income goals.
- Write out a contract with the loan amount and interest rate.
- Establish a written repayment schedule.
- Keep detailed records.
5. Fund It Yourself With the “Bootstrap” Method
This is an old-fashioned way of getting the funds to start a business. It may take a while, but it’s honest and doesn’t leave you in debt to anyone. You also don’t give up any control of your business.
The self-funding route simply means saving enough money to build up a large operating fund before you start your business. It could also mean taking out loans on low-interest credit cards, selling your valuables or raising funds with a side gig.
As entrepreneur Brent Gleeson writes in Forbes,
“Most entrepreneurs and small business owners these days have come to the realization that they will have to self-fund, also known as “boot-strap,” their projects for a significant amount of time until more formal funding opportunities become realistic. There are many ways to accomplish this, from savings accounts and zero interest credit cards to leveraging other personal assets.”
Ready to Escape Your Classroom?
Use Your Website to Get Funds to Start a Business
This method can take a long time. It can also leave you strapped for cash. If you’re not making that much money right now, you may not have access to credit cards. If you’re not making much money, how can you build up the savings to start your business?
The answer is to establish a system that keeps money flowing into your account while you run your business. If you set up a website that’s self-sustaining, you can receive a steady income that will keep you and your business financially viable.
A Self-Sustaining Moneymaker Is the Best Way to Get Money to Start a Business
Are you ready to take control of your financial life? Here’s why a website that’s self-sustaining is the best way to get a steady income while working on your business.
No matter what your business is, you’re going to need an online presence. Companies without one look like they’re stuck in the middle of the last century. Experts agree that these companies are missing out on a big chunk of the market.
Why Not Start with an Online Presence?
One of the first things needed in setting up an online business is to determine what niche you’re going to cover. The thing you’re going to promote. If you’re looking for funding for a business, chances are good you already have a product, or know what you’re going to promote. You’ve already got your niche! That’s huge!
You already have a topic that consumes your every waking moment. And, that’s good. It means you are already an expert in your niche and can write all kinds of content explaining and demonstrating it to your future clients.
While you’re building your website, you have the opportunity to:
- Build real credibility in your niche.
- Build a customer list that gives you direct access to your potential clients.
- Try out all kinds of new ideas and tap into just what your market is looking for.
While you’re building your site, you’re building your cash reserves without having to touch a penny from the income that covers your regular expenditures.
Worried you don’t have all the skills to build a viable website? Don’t be.
This page explains the four easy steps to getting an online presence established, and even gives you a chance to look it over with no obligation.
Starting your own online business will allow you flexibility you never thought possible.
Check out my #1 recommendation for building an online business. They provide wonderful hosting, amazing tools, and teach you everything you’ll need to know.
Here’s a small sample of the over 100 things I’ve learned so far:
- A fast, easy way to build a website.
- How to use WordPress.
- What keywords are and how to choose the best.
- How to write posts people will want to read.
- How to use social media to your best advantage.
- Why being indexed by Google is important, and how to make it happen.
What a great advantage! Build your credibility and your startup fund at the same time.