Fortunately, there are many ways to come up with startup funding and bring your dream to life. You could also start on a smaller scale to see how things go but with less upfront capital, using your profits to scale your business.
Starting a microbusiness costs around $2,000, but buying into a franchise can run $10,000 or more. How much you need in startup money depends on the type of company you’d like to start. For example, having inventory will require more funding than a service business might. Think about how to make your idea smaller at first so it’s easier to raise the money you need.
You’ve likely heard of a few ways to raise money for a new business venture. Some are pretty obvious and others are a little more obscure. Here are some various fundraising efforts, including ideas you might not have thought of before.
1. Ask Family and Friends
Loved ones want to see you succeed. If you’re comfortable and know the people in your life have a little extra money to spare, you could ask them to front your costs. Exchange free products or services or offer to pay them a percentage of profits until they recoup their investment.
For example, let’s say you want to start a small coffee shop in your hometown. Family and friends might contribute toward your startup cost in exchange for free coffee for a few years, depending on the size of their investment.
As an added perk, having them come in to get their free items makes your shop look busy and popular and may attract other foot traffic. If those in your inner circle support you by funding your startup, pay them back in whatever way you’ve agreed upon. It’s tempting to pay off personal loans last, but doing so can damage relationships with people in your support system.
2. Get an Advance on Your Inheritance
Are you waiting for money to come through on an inheritance, but it’s stuck in probate? Inheritance funding can be a viable way to invest your future assets now. You can either get an advance or a loan, depending on the type of assets being left to you. Typically, the lender evaluates the person’s estate and figures out what you stand to inherit. They then offer you an advance or loan,and when the probate settles in the future, they keep the full amount.
This is a good option if you are the heir to an estate tied up in probate. In the United States, it takes about 17 months for funds to get distributed. A cash advance allows you to get the money well before that time frame and start a new life and business. You may give up a little money in the long run, but you also could raise as much by investing it wisely.
3. Take Out a Business Loan
One of the most common ways of securing funding for your new business is taking out a small business loan. Most banks offer various options, from a personal line of credit to other lending scenarios.
Your best course of action is to talk to your bank manager. They’ll evaluate your personal credit, examine the business plan and make a decision. If one bank says no, don’t give up. Try another one because some are more likely to invest in local enterprises than others. Watch payments, interest rates and what you’ll pay over the life of the loan.
4. Attract Investors
Investors often look for great ideas to shore up. They want to know they’ll likely see a return on their investment, so you’ll have to convince them of your business idea’s viability. They will also assess your personality and how well they think you’d do at overcoming the challenges of entrepreneurship.
You can find angel investors via sources like AngelList, Angel Capital Association, Angel Forum and social media groups. Be cautious about who you pitch a unique idea to, as you could risk losing it to someone else with the funds to make it big. Make sure you understand the terms of the investment repayment and that your business can still make a reasonable profit even after paying investors their percentage.
5. Pool All Your Resources
How much do you need to get started today? You might be able to pool your resources and come up with enough money to get your company going. Try selling off big-ticket items you no longer use. For example, that old gaming system might be a collector’s item. Also, consider pawning jewelry you never wear, selling an expensive car and buying a cheaper one, and having a garage sale.
Tap into money lending apps to gather up a few extra hundred dollars in advance of your next big paycheck. Be sure to read all terms and conditions carefully so you understand when and how much will come out of your accounts. However, getting a money app loan can help fill the gap when you need to start your business immediately.
Another idea is to put some of the costs on credit cards, but that is only a short-term solution as the interest rates are often exorbitant.
When a lot of people pool a little money, it grows into enough to meet needs. Determine how much you require to get your business going and start a crowdfunding campaign. Share the link with everyone you know and tell them even a few dollars makes a difference.
Read the rules for groups of your own and post the link where it’s allowed. Are you part of any small-business owner groups? Post there. If you belong to an organization, church or other group, ask the members to contribute.
7. Seek Grants
You might qualify for a woman-owned business or local grant for your area. Different industries also offer money to get more women involved or fill a need in a community. Spend some time searching available grants and practicing how to write one.
If you know someone who writes grants for a living, ask them if they’ll give you some feedback. The more polished your proposal, the better your chances of winning some money.
Grants are an ideal way to get the money to start your new company because you don’t have to pay them back. You may have to meet certain conditions, such as offering employment or resources to local citizens, but the money is yours to keep if you use it for the intended purpose.
8. Offer Preorders
The International Trade Administration predicts retail e-commerce will hit $6.4 trillion in 2024. More people shop online than ever before and discover new products via social media platforms such as Instagram, TikTok and Facebook.
Create a video of what you’re selling. Offer preorders with the understanding delivery will be in the future. Kickstarter-style campaigns go over really well with younger generations who want the cool new gadget and don’t mind waiting for it.
9. Pay as You Go
Another option is to start small and build your business along the way. Some of the biggest success stories in the world began in someone’s dorm room or garage. Start your business as a side hustle.
The key is to have a strategic plan for scaling up when you pay as you go. You’ll need to get creative to hit your goals. You might combine various strategies to fund things such as opening a storefront, hiring your first employees and launching the online portion of your business.
10. Take on Partners
Are there other moms in your circle who’d like to start a business, too? You might be able to bring them in as partners, expand your knowledge and get the startup funds you need to launch your brand.
You will have to share profits with this model, so make sure it’s enough to sustain the number of people building it. For example, a small local mom-and-pop shop may not offer enough revenue to pay three families, but it could be enough for two people to share.
If you take on a partner, you’ll want written agreements to avoid any misunderstandings and solve potential future conflict before it happens. For example, what if one business partner wants out? Will you have time to come up with the funds to buy them out, or will you have to sell the entire company?
Consider every potential scenario and consult an attorney to ensure the agreement is fair to both of you. This could really help your company in the long run.
Don’t Let Anything Stop You
If you have an idea and the passion for making it a reality, don’t let anything stop you. Financing comes from many different sources, so exhaust every possibility and consider even more options, such as working a side hustle to raise the money. A little extra effort will help you become a successful business owner.