Starting a business can be overwhelming. Among the many factors, one of the most overwhelming aspects of starting a business is related to its finances.
According to statistics, 20 percent of new businesses fail within two years of being launched. One of the biggest reasons behind this high percentage of business failure can be attributed to financial constraints.
Finances are important at every step of your journey but before you can even think about preventing failure, you need to accumulate the requisite money to get your business running in the first place. If you have an idea that you think is worth pursuing, but you’re not sure exactly how to go about getting financing for it, here are some of the proven ways in which you can go about financing your business venture.
Angel Investors
One way many startups get capital is by finding people who have a lot of resources and are professional investors. These investors are called angel investors and they are usually seen investing their money in promising startups.
Often angel investors contribute the necessary money that will enable you to lay focus on your business operations, expanding the resources, and not worry about the finances. However, in many cases, a lot of the Angel investors like to be involved in the daily development of the business. This can lead to a potential conflict of interest; hence a clear and honest communication is imperative.
Try to find an angel investor who is knowledgeable about the type of startup you have. This way you can have another expert on board that will add to the expansion of your business venture.
Crowdfunding
Another great way to get investors for your business is through crowdfunding. Crowdfunding websites let you present your idea to several different people and have them contribute to its development.
People who contribute to your crowdfunding project will do so because they believe in you and your idea. They will not have a direct impact on the running of your company daily.
If you prefer to get help but don’t want someone as hands-on as an angel investor, then crowdfunding may be a good option for you.
Business Loans
A proven and common method to finance your business is through business loans. This is a very popular option, wherein you can go to your local bank and discuss your business idea with a loan officer.
To qualify for a loan your credit score will be considered. It is ideally important to have a good credit score to be successful at getting a business loan.
However, it doesn’t stop there, to accept business and debit card payments you will need to get a merchant account. Your credit score will also be looked at here as well. You can find out how to get a merchant account with bad credit here.
Finance Your Business
Financing your business is the first step to making it a reality.
Once you’ve created your business plan with a firm idea of what you want to achieve, getting people with capital to invest in your business is the next hurdle.
Just be strategic about which of the methods discussed here you use. This is the best way to guarantee that you will get the funds you need.
