You’ve got a great business idea. You know it’s going to take the market by storm. The only problem is that you don’t have the money to get it off the ground. What do you do? In this post, we will take a look at three different funding solutions for your startup.
1. Start Even if You Don’t Have The Capital
A third of all startups begin with a budget of less than $5,000. And while it might not be ideal to start a company without enough capital, if your idea is time-sensitive, it may be essential to get started right away. However, if you choose to go this route, there are a few questions you should ask yourself first.
What Assets Do You Have?
Let’s say that you’ve decided to turn your hobby into a business. That’s not a bad idea since you already have all of the tools and skills needed for your startup. You might even be prepared with raw materials and other physical assets. Even if you lack cash assets, these materials can be sold for a profit, giving you a much-needed financial boost.
What Alternative Measures Can You Take?
If you choose to get started with minimal capital, your finances will definitely be tight. But there are alternative measures you can take to cut costs wherever you can. For example, you can look into automation. The more processes you automate, the less staff you will need for your startup. Look into purchasing a good CRM system. It might cost you more upfront, but it should pay for itself within a few months.
You can also see if any employees are willing to come on board for the promise of a future reward instead of payment. Offering a stake in the company is a great incentive for potential staff members. In doing so, your business will be fully operational with minimal funding, and your hired staff will actively work towards success and growth in the company.
How Much Can You Bootstrap?
Before diving in, make sure to consider how much bootstrapping you can afford to do. Saving money is great, but only if it doesn’t result in poor quality. If bootstrapping gets in the way of your ability to deliver the best possible product to consumers, it is going to do more harm than good.
2. Borrow Money for Your Startup
Another option is to borrow money. While it might not always be wise to go into debt, if done correctly, borrowing money can be a good way to start your business. Just be sure to do your research. Put together a strong case to present to potential lenders, and look for a loan with the lowest possible interest rate. Startups can be risky ventures for financiers, so you should also be prepared to offer some form of collateral.
3. Attract Investors
Attracting an investor might be the best option for you and your new business startup since there are several options to choose from. Angel investors, venture capitalists, cryptocurrency tokens, and crowdfunding are all good options. Whichever type of investor you choose, you should prepare to present your business in a way that will be attractive to them. You can offer them a share of the business, explore the idea of profit-sharing, give them a say in the business operations, or perhaps even provide them with products.
It’s wise to think through the impact these investors will have on your business. Let’s say you offer someone 50% of your company. Are you going to be able to buy them out if the business takes off? How much influence will they have on how the company is run?
A lack of funding can be scary, but it doesn’t mean you have to halt the development of your budding business. There are plenty of financing options to choose from. Whether you choose to start without the capital, borrow money, or attract investors, just be sure to think through all of the costs and benefits for your specific startup ahead of time.