This is probably the most pressing issue for start-up businesses. Because as a new business owner you don’t want to fail as soon as you open the doors. You want to succeed. And by succeed I mean make money and be able to pay the bills when they are due.
Now before I share the 6 most popular ways to fund your business, I am going to share a bonus tip about how to fund your business. And yes I am giving you the bonus up front. Here it is, make a list of as many ways as possible to make an extra $100 or $200 or whatever amount you come up with, a month. Doing anything you possibly can, legally of course, that will generate that extra income. Start with just 25 and see how many more you can add.
Here is an example of a few:
1. Get a part-time job
2. Have a yard sale
3. Take things that did not sell at yard sale to a consignment shop
4. Host a fundraiser
5. Cutting grass
Those are just a few if you are really fresh out the gate and you’re bootstrapping your business. For those who are actively working in their business, here are some more strategic ideas that are business driven. Before you do any of them, the first thing you need to do is figure out how much you need to get you going and how long a period you want to save it over. I call this my Dream Big Goal.
Every week or every other week when you get paid, put aside an amount toward your Dream Big Goal. And whether you plan to save over 12 months or 24 months, stick to the plan and actually do it! If need be use an account that you can’t withdraw from to keep from spending it.
If you have worked on your job long enough you may have a nice chunk of change in a 401K or IRA retirement account. If you decide to use this, you have to have your plan down pat. You have to know how much you need per month and how many months it will last – worst case scenarios. This plan has to be trump tight. You don’t want to get stuck in a situation where your business isn’t up and running and you’ve ran out of money. Before you take that money, check with your tax accountant.
Crowd-Funding is one of the newer ways to fund your business and it is becoming one of the most popular. This is when a group of people, who may know each other or they may not, each make small donations to a fund for you and your business. These donations are typically less than $25 per person, although the donor can give more. Sound simple enough? Be mindful of the rules, because they all work differently. For instance, some you have to pay back and others you don’t.
Grants are always great because they never have to be re-paid. Nothing like some free money. For these you have to do your homework. You have to dig and find them and check the requirements necessary to get them. You have to know that just because its free money doesn’t mean it will easy money.
The ole tried and true way to fund your business is to request a loan. This can be from your current bank institution, a new bank institutions, or even the SBA. Just know that depending on the amount of the loan, there may be some requirements needed for you to follow to keep the loan.
Investors are a great way to fund your business, because even though you have to pay them back, these people are usually giving you the money a large amount because they want to see you succeed. And they do that knowing that you are not paying it back anytime soon. These investors can be friends, family or anyone you know who believes in your you and your mission.
What ways did you use to fund or what ways are you funding your business right now?
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