You have a brilliant idea, you have a wide audience of potential customers who will benefit from your product or service, and you have all the know-how needed to run your startup. But this is where a reality check comes in handy, and those not-so-beloved stats showing that almost 30% of startups fail because they run out of money. The high level of competition you’re about to face paired with evolving market needs means that your funding strategy needs to be foolproof in order to prevent money-related failure.
Since you already have that key prerequisite in the form of a genius startup idea, you should have no trouble attracting the right financial support for your business. However, choosing the right funding source is as relevant as gathering enough funds to build your brand from the ground up. Here are several most viable funding options for your startup that you can research in order to find the one that suits your business the most.
Crowdfunding as the trendiest financing option
The proof that a little can go a long way, crowdfunding platforms have indeed come to life in order for the regular folk to be able to support the brands they know they’ll love. Even though many platforms have a preferred industry or a niche, you’ll find that most are open to anything from tech startups to creative businesses looking for a cash injection to get their company off the ground.
Another perk of starting a campaign on these platforms is that you’ll get that much-needed exposure to your target audience, and you’ll be able to test the waters of the market. The support you receive will be a perfect reflection of the need that exists for your brand to come to life. Keep in mind that this may turn out to be a time-consuming process, since you’ll need to nurture your campaign and wait for the desired sum of money to be collected. If you need a faster, more readily available option, this should be a backup plan only.
Unsecured lending from reputable sources
While we’re on the subject of financing options that are quick and efficient, obtaining unsecured business loans is another great opportunity for startups in need of funds to operate successfully. The entire process is simple, streamlined, and can be finished as quickly as within the span of a single day. Unlike bank-based loans, these alternative lenders are committed to securing funds for small businesses that need to scale successfully, and funding a startup is precisely that kind of a challenge.
Not having to secure your loan with your own assets is a great perk for startups whose owners are eager to build an innovative company. Since banks insist on having some form of collateral, and most new startup owners use all of their capital to build their business, loans that don’t require security mean no fuss for future business owners.
Tap into your personal savings
This is another one on the list that will test your patience, and perhaps one of the most demanding routes to take for startup owners who are first-time business owners and choose to go it alone. On one hand, personal funding is an amazing way to build self-reliance in the business world, and to ensure that you conduct thorough forecasts and projections, so as to cover all of your financial bases from the moment you decide to put your plan into action.
On the other hand, relying solely on your personal savings as your startup capital can be a risky venture. You run the risk of investing everything into a business idea that might not take off quite as well, and not to mention the fact that you might run out of funding when you need it most. Unless you’ve truly accumulated a significant sum that will keep your startup going smoothly until you start turning a profit, it’s best to use your personal fund as a safety net or a source of added capital to your existing financing strategy.
Micro-lenders for smaller startups
As the name implies, micro-loans are a great solution for startups that are small, even though they think big. In essence, today’s companies can indeed have a very small start, with a crew counting no more than one or two people, but their reach can be significant in a matter of months with the right business plan. So, if you’re only looking for that initial financial “nudge”, then a micro-loan typically coming from nonprofit lenders is a great solution.
You can use them for anything that you need the most, whether it’s to cover the costs of your business equipment, or those very first business steps such as registration, marketing, and launch. As soon as you pay off that first micro-loan, you’ll be able to qualify for more substantial sums in case you do need them down the line.
Everything from kick-starting a business, running it on a daily basis, all the way to managing its growth can be very demanding on your budget. Make sure to build an airtight budget plan for your startup based on these financing options, and you’ll be able to scale your business successfully over time.