If you have a dream that’s strong enough, and you believe in it deeply enough, then you shouldn’t let money hold you back from pursuing your dreams no matter what. If the only thing standing between you and you dream of entrepreneurship, then it’s time to think about your options. One thing that has to be said at this point is that it’s not easy to be an entrepreneur, and so it is understandable that anyone thinking about it would be a little intimidated by the prospect of launching a business enterprise.
The statistics, according to the Small Business Administration, state that about half of the businesses that are started every year in the United States will survive to the five-year mark. A paltry third will still be standing in a decade. As for the legendary businesses, the ones that go from a garage to being the superstars of the American economy, less than 1 percent make it that far.
Those dire statistics tell you that the chances of getting very far as an entrepreneur are not very high, and you’ll be working against the odds right from the beginning. I believe you’re a fighter, and you’re going to make it. Only a fighter would make this choice in the first place. So, what options do you have as far as funding is concerned? Here are five that are our best bet at the moment.
5 Ways to Raise Money for Your New Business
1. Debt Capital
This is first on this list because it is your soft landing when everything else fails. As long as you have a sound business idea and a detailed business plan, it shouldn’t be difficult to get a loan from your local bank.
The beauty about going to a bank for a loan is that, if the bank refuses to lend money to your business, provided you have good credit, you can get a personal loan or line of credit and use it to fund your business. Just make sure you’re fully prepared by the time you have the meeting with the loan officer. You don’t want to get blindsided.
If the bank doesn’t work out at all, and you have bad credit, there are plenty of institutions that will give you loans in minutes. Just remember that loans should only be taken to fund ventures where the funds are recoverable through revenue and not things like rent and salaries.
- How to Improve Your Odds of Getting a Small Business Loan
- 23+ Small Business Financing Options for Startups
- 20 Types of Small Business Loans Can Help your Startup in Trouble
2. Friends and Family
Your family and friends are the people closest to you. Even when your credit is terrible, and no one else trusts or believes in you and your ideas, these are the people most likely to come through for you.
The beauty of it is that, if you’re lucky, they might not even need you to pay back the funding they provide you and will want to take it as a gift.
3. Venture Capital
OK, to be honest, venture capital isn’t easy to come by. Venture capitalists also tend to target certain industries and have their own criteria for vetting ideas before they fund them.
If you feel like your idea is in the right ballpark for a venture capitalist to consider, then this might be a great option for you. You will, however, have to be prepared to give away some of your business. That isn’t necessarily a bad thing. You get to leverage the experience, resources and commitment of the venture capitalist because they now have skin in the game.
Crowdfunding is another viable way to fund your business. There are plenty of sites that offer a platform where startups can seek and receive funding.
The beauty of it is that the risk is well distributed because each person is contributing a small amount. However, since a large number of people is making the contribution, you can raise a lot of capital this way.
You also don’t have to give away ownership of your startup this way. You can promise them special editions of products or great discounts instead.
If getting money from others doesn’t seem to work, why not use your own? You can dip into your personal savings, take a loan out on your home, and even use your credit cards to bootstrap your business to success.
Lots of businesses have been successful this way, like GoPro. Once your business is on the rise and your idea starts to get validated, outside capital will be aching to join in on the fun.
Author: Bruno Souza