A high unemployment rate, lack of benefits and being tired of working more with less pay are some of the reasons why in the last few years, we’ve been seeing an increasing number of people become their own boss. However, the number one obstacle that individuals run into as they attempt to start up their dream enterprise is funding. The following are seven tips to help you raise money to start your business:
1. Use your personal savings – Most people save for retirement, a vacation or a “rainy day.” Not being satisfied with your current job and having a desire to pursue an entrepreneurial dream sounds like a rainy day to me. Tapping into your personal savings is ideal because you won’t have to worry about paying anyone back. But make sure you have a well thought out plan for becoming an entrepreneur and are not making an emotional decision.
2. Get a loan from a bank – Despite what is going on in the economy, bank funding is still an available option, but you are going to need a solid business plan. Most banks don’t provide start-up loans and require that you are in business for at least three years. However, the Small Business Administration (SBA) does partner with certain banks to provide SBA guaranteed loans to start your business. You van visit SBA.gov for a list of those banks.
3. Take out a home equity loan or refinance your home — If you are a home owner and have accumulated some equity in your house, then you can take out a home equity loan or refinance to get the capital you need to start your business. The good thing about this type of loan is that some of the interest paid may be tax deductible.
4. Apply for grants — There are tons of government grants available that are designed to assist start-ups. The great thing about these grants is that they are not loans at all—they do not require you to pay the money back, so long as you are using it for its intended purposes.
5. Pith to an Angel Investor or Venture Capitalist–Some people are opposed to angel investors (AI) or venture capitalist (VC) because in order for them to fund your business, you’d have to be willing to give up some control over it. So basically, an AI/VC would act as a “silent partner” in your business. Though this option isn’t for everyone, there is some benefit to having an AI/VC—most have access to public relations and marketing so they can get the word out about your business at a faster rate.
6. Monetize a website — This is considered the most cost-effective way to start a business. With free access to millions of people around the world, starting a website and monetizing it is relatively easy. If you knowhow to build and promote the site, then you can be in business in no time.
7. Kickstarters.com –This is a new way of starting a business. Kickstarters.com is a donation-based website where people can donate money to help you start your business. Here is how the site works: first, you will need to make a video talking about your business idea. Next, set a target amount of money that’s needed to start your business. Then set up donation tiers stating what a donor would receive if they invested in your business. Finally, promote your video and watch people donate. The excellent thing about this is that you don’t have to pay it back.
Keep staying focus because once you obtain funding, that’s when the fun begins!
Ash’Cash is a Business Consultant, Motivational Speaker, Financial Expert and the author of Mind Right, Money Right: 10 Laws of Financial Freedom. For more information, please visit his website, www.iamashcash.com.