Promoting a business can become a disaster if you do not have a significant budget, sponsors, or another source of income. However, there is a way out. Here we would explain where to find financial resources and develop your business. There are few opportunities to find funding early on in a project. It is important to understand which ones are right for you, what are their pros and cons.
Top 5 Tips for Business Financing
Modern technologies and mobility allow people to work and perform some actions online from any part of the world. That is why any entrepreneur always has a choice. Statistics for the last year have shown that 80% of companies successfully exist the first year, and only 50% of them can prolong their survival till the fifth anniversary.
#1 Getting Financing From Future Clients
Sometimes the best decision is to involve big companies and get financial help from them. To catch their attention, you have to prepare and show them your goods or services. In other words, the shortest way to gain potential customers is to advertise the products and let them test them for a while, so they would see, assess them and decide if they are ready to invest. In US history, you may find various examples of that kind of collaboration. The famous Bill Gates once developed his company thanks to IBM.
#2 Loans With Collateral or Without
Sometimes businessmen check short-term loans list in Fit My Money to cover some budget gaps. But it is a good decision only for personal finances. As for business, this may sound like the worst decision ever but in most cases, if you have defined goals to achieve, this option might help you to make some improvements. As a result, you may produce better products with the help of modern equipment and gain a more interested audience.
#3 Classic Crowdfunding
This is a collection of money for the implementation of a project from a large number of small investors interested in your product. In other words — with the world on a string. There are professional sites where you can post a description of the project and where there is already an audience of people willing to finance business: Kickstarter, Indiegogo, Fig.
The first platform is the most popular among netizens. If you select the option, keep in mind that you have to provide the user’s full data about products and services and wait some time to see the result. The crowdfunding market size has reached $30 million in 2019 and continues growing each year for 16% more. According to Statista, by the year 2025. The crowdfunding transactional value in the US is expected to reach $574.3 million.
#4 Professional or Aspiring Private Investors
Personal money contributions — usually in the early stages of project development. You can find the largest of them by googling the top popular. As a rule, in their social networks, they write themselves how best to contact them. The rest live at exhibitions, hackathons, and other themed events.
And here, it is important to be able to quickly and efficiently tell about the project. And finally, if there are no investors at sight, you can try to look for them on specialized world sites, such as AngelList, Startup Point, or PitchBook. This is how the ticket service Ticketforevent.com.
#5 Exchange of Shares of a Company Through Options for Necessary Services
Funding for a company is needed to receive certain services that allow it to grow. Why not exclude money from this chain? If you have a strong enough reputation and a promising project, you can always pay with shares in the company.
Most importantly, do not forget about the cliff and vesting formula for employees (Google will help). Facebook used to pay with its shares for the design of the new office. Mark Zuckerberg received the fashion artist’s graffiti. And the artist David Zhou is the share that, when Facebook went public, was worth $200 million.
How to Begin?
As one prosperous businessman has said, “The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.” – Nolan Bushnell, Entrepreneur.
It means that people tend to dream a lot, but rarely do they make them come true. Start doing small steps today. Mistakes can happen, but you can avoid them by reading the specific literature. It is even better to become a subscriber of entrepreneurs in your niche. Thus, you can be updated on any adjustments and see their progress. Great examples show others how to manage money wisely. Our list with tips and lifehacks can be continued, but here we mentioned top advice that works in 80% of cases.
To Sum Up
The choice of a specific development option depends on the characteristics of the company. However, if you just begin your business path, start with the idea today, create a plan. Then, based on opinions from successful businesses, we can say that it will be more effective to combine various methods of obtaining financing. There are some actions that you can begin doing today to see some results in a year or even sooner:
- To try to close everything at once with one source;
- It is better to move progressively according to the stages of the startup’s development.
- First, get funds that will be enough to create a minimal product and test an idea. When the first results appear, it will be easier to attract funding. This is the most logical and cheapest option.
- Start raising money on special crowdfunding platforms.
- Think closely about your product’s offer. Answer some questions and identify their advantages.
Money is the key to a successful project mostly, but sometimes an original idea can promote itself. Start advertising it, and you may find sponsors and get financial help sooner. Or make collaborations with other brands to reach various segments of the crowd.