Everybody has the potential to start a billion-dollar company based on the ideas they have. Yes, everybody. Most people come up with great answers to the world’s problems. But what do they do with these ideas?
They dump them and move on to working a 9 to 5 job trying to make someone else rich while not doing anything for themselves or the world. This makes it especially hard to live in a world where we have so many problems, we desperately need solutions for. To live in this world and not do anything about it is a big sin that we all commit every day.
To fix this world, we would need a lot more than mere ideas though. We need people who are willing to turn these ideas into actions. There are a ton of people who are filling to do that but unfortunately fall short of funding. This causes them to give up on their ideas and start becoming average. If you have a billion-dollar idea that can save the world and also set up a profitable business for you, it is great. But now you need to know how to get funding for your business.
Unless you have a huge plot of land lying around or some other means of providing you the capital you need, you will need to rely on external sources for your funding.
Let’s look at some of the funding options you will have for your new business.
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Bootstrapping
In terms of entrepreneurship or finance, the term bootstrapping refers to the act of collecting all the funds you have in various different forms and using them to finance your startup. These various funds may include the balance in your savings account, any fixed deposits you can withdraw, credit cards, etc.
This will eventually turn into a big boon for your startup as it will prevent you from borrowing your initial funding from other or from taking a loan from a bank. Hence, this will prevent you from going into debt and having to pay monthly EMIs for years to come.
These funds can pile up to at least 80% of the requirement in most cases, while completing it in most others. When people use this to invest in their business, they are more relaxed and generate more profits. But if you’re still wondering how to get funding for a small business, read on bellow.
Borrow from Family and Friends
Borrowing from your family members and friends is always a nerve wrecking task. But, luckily, tapping into those people who are closest to you is always better than going for external funding sources.
Asking can never ever hurt anyone, so give it a shot. While your relatives may not have the amount themselves to be able finance your business, but they might be able to contribute a few hundred dollars to help you get started. And once you get things in motion, you will have nothing that will try to stop you from completing your goals. This will also open the market for external investors when the time is right.
But before you go and request them for the funding, you need to have a business model that is ready to be pitched. Keep in mind that they are your first investors. You should also explain to them what you’re asking for – an investment, a loan or a gift. This will help them understand if they should expect any money back from your business in the future or not.
Alternative Funding Sources
If you are looking for an amount of up to $25,000 then there are a few companies you need to know the names of. These provide micro-loans to startups and small businesses that seem to be promising enough.
These websites include organizations such as Kiva and Accion. This will help your business get a head start and assemble a team to get your products and services rolling. Though, it is important to know that these businesses generally only cater to US citizens who are below the poverty line and cannot afford to fund their ideas with any other method.
Another alternative funding method is called crowdfunding. This is a method which involves pitching your idea to millions of people on the internet on websites such as Kickstarter and IndieGoGo. They provide you a platform which you can use to pitch your idea in front of the internet and they can choose to fund you.
This will help you to even get some of your first clients, except that your clients are the ones who will fund the start of your product. To utilize crowdfunding, you will need to set up an account with the website. Then you will be asked to create a project and name it and describe it a little for potential investors. The next step would be to set a money target for your website and get started with your crowdfunding activities.
Kickstarter will only give you the money if you meet your goal or else it will be refunded to everyone who funded you. On the other hand, IndieGoGo will take a cut of the proceedings and let you keep all the remaining amount of money.
From time to time, you would be required to post updates on your product and if you will need more funding for it, this would be the way to request it. These constant updates should be there to show the investors that their money has been put to good use and is not being misused at all.
Small Businesses
If you are instead planning to start an old-fashioned small business, you will need to check out the small business development center in your locality. This will let you know how to get funding for a business and how to get other investors interested as well. Some of these groups are in touch with angel investors and can get you in touch with their funds as will in order to help you. Other options may include the chamber of commerce in your area. You can contact them for more information.