Funding Options for Your Startup in 2017
BY: MEGAN TOTKA ON FRIDAY, MARCH 31, 2017
Are you trying to narrow down your funding options for your startup? Each funding option has its pros and cons, so analyzing them in greater depth is crucial to getting your business started on the right foot. From angel investors to boot strapping, take a look at 5 powerful options you have to fund your business idea.
If your business lacks investment potential, bootstrapping could be your best course of action. This happens when a company uses its revenue to continue to build the business, instead of using a loan or investors at the outset to buy everything upfront. There are challenges involved with bootstrapping, but the option offers a lot of benefits, too. One major benefit is that you do not have to share your profits with investors. Even if the profits are a ways down the road, they are yours. There are bootstrapping success stories to be told, so if you have an idea but lack the funding to get things going, this is one great route to consider.
Family and Friends
When it comes to finding startup business loans from traditional lending routes, the options can be intimidating. Your family and friends just may be the best options – they can offer fantastic support, and are often eager to help you build your business from the ground up. If you want to reach out to ask your family and friends for seed money, remember that strings will be attached no matter how you structure the transaction. Make sure to get your pitch in writing and keep documentation and communications formal, even though it’s tempting to keep things casual and friendly.
Credit Cards and Loans
The use of business credit cards or loans may be the best option to fund your startup if you can reach your goals in the short term, plus you will retain 100 percent control of your business. If you go this route, do so with care. Credit cards can be a slippery slope if you don’t pay your balance and business loans can have high interest rates and specific terms on paying them back. Do your research into the different types of loans to find the right one for your needs.
You can opt to tap into private lenders – private investors can give you the money you need to make your dream a reality. Contrary to common belief, there are a lot of private lenders who want to fund your innovative ideas. It’s imperative to make sure you pair up with one who is the best choice for you, so don’t be too eager to accept the first offer that comes your way. Once you get the ball rolling, take advantage of the easy ways businesses can reduce operating costs so you can get the money paid back in a timely fashion.
Another powerful strategy you could take advantage of is angel investors. As long as you have the ability to craft a strong business plan, you probably won’t have any trouble getting the funding you need. Angel investors inject capital for startups in exchange for business equity or convertible debt and typically invest from $25,000 up to $100,000 a company.
If you don’t have the funds necessary to live your dream, it doesn’t mean you’re at a dead end. Your vision can become your daily life – you just have to find the best funding option for your business so you can get it funded and growing.
Image via Shutterstock