6 Ways to Get Funds to Start a Business
It has become increasingly popular to start a business. Many people are shying away from the typical confinements of an office job and are instead opting to create their own companies. Whether you’re starting a home-based business, renting office space, or contemplating the idea of owning a franchise, you’re going to need to have enough capital to start the business and keep things afloat until the money starts coming in.
Now unless you’ve been saving up for years, or are starting a business with few startup costs, you’re going to need to find a means (or several) to get money. There are plenty of options available to you, some will depend upon your financial history while others may require a little elbow grease and terrific pitching to get where you want to be. So it’s going to be a matter of personal preference.
Before Getting Started
Before you start looking for the funds to start your business, you first need to have an idea of what it’s going to cost you. If you’re thinking of owning a franchise of a major company such as UPS, you’re looking at a UPS franchise cost that can range from about $159,224 – $273,702. If you are going to start a business out of your home, you’re looking at anywhere from $5,000 to $25,000 depending on the type of business. Lastly, if you’re looking to lease a brick-and-mortar location you’re looking at a minimum of $30,000. Knowing what you’ll need can help you determine the best way to get the funds.
Ways to Get Startup Funds
- Crowdfunding – One option that has become increasingly popular for all types of causes is the process of crowdfunding. Platforms such as Gofundme make it easy for users to set up accounts, state their purpose for the funds, set a goal and market their cause to the digital public. If you’re good at marketing and don’t want to have to deal with paying anyone back for the funds, this is an ideal option.
- Fundraisers – Arranging a fundraiser to get the funds for your business is another option available to you. A popular method would be to host an event such as a dinner, cocktail party, or brunch and invite individuals that would be interested in giving to your vision. The cost of tickets, raffles, and whatever else you might charge for would essentially be used to fund the business.
- Asset Borrowing – If the amount of cash you need is minimal or you’d like a quick turnaround, you could consider asset borrowing or short-term lending. This is when you exchange valuable assets for a loan. You provide an asset such as jewelry, an expensive electronic, or even a vehicle, and it is inspected and valued which determines how much you can borrow. You then sign an agreement stating that you will repay the loan in a timely manner in order to receive your asset back. This is a beneficial option for those who may not have the best credit but really need to raise funds for their business.
- Personal Loans – If you have fair credit and need a large lump sum of cash, the best option might be to talk with banks or credit unions about a personal loan. Of course, this will require a review of your credit history and a loan agreement, but it can prove beneficial and fast if your financial health is in good condition.
- Grants – The government has a plethora of grants out there. This is essentially free money for individuals who are looking to start a business. You could get hundreds or even thousands of dollars to get your business off the ground and never have to pay it back. You’ll need to have a business plan and draft a nice proposal that details why this is a good business, how it can benefit the community, and how you plan to use the funds.
- Partnerships – If you can’t muster up the funds on your own you can always consider going in with a partner or two. They would essentially acquire some of the costs of starting a business to take the hefty costs off of you. You’ll need to iron out the details of the partnership with an iron-clad business contract to ensure that you have an equal share of the business. There are also options for silent partners if you’d prefer to run the business on your own.
Your dream of starting a business can be made a reality with a bit of planning, research, and capital. Each of these options is doable but may require you to have a good credit history, valuable assets, a substantial reputation, or simply knowing the right people. Whether you use one or all of these ideas be sure to do your due diligence.