The market is getting more competitive by the minute, and the risks involved in starting a business often discourage even the most brilliant of innovators from dipping their toes in this fast-growing business universe. One of the greatest hurdles that prevent entrepreneurs from kick-starting their company is the lack of funding, especially for business owners with a history of bad credit.
On a brighter note, not all is set in stone for such businesses, and if you have faith in your idea, and a solid business plan to support your financial needs, there are options you should consider. After all, we live in the era of opportunities, and the following are among the most promising funding options that can help you build your business from the ground up.
Seek out angel investors
The world is brimming with investment opportunities, and affluent individuals often don’t shy away from an ingenious idea despite the bad credit history that comes with its owner. In fact, many wealthy people are actively looking for ways to invest their funds in startups, and this economy heavily depends on their generosity. However, even entrepreneurs with a solid credit background need to dazzle these investors, so imagine doubling that effort to secure their investment.
Oftentimes, investors will want to get venture capital in exchange for the given funds, and as co-owners of your business, they will want to take an active part in building your business. That means that you should find a reliable partner that will share your vision and support your goals, not merely take over the steering wheel once the money is available.
Talk to your loved ones
Having a rich uncle can truly pay off if you know how to present your business strategy to a family member and keep your personal and your professional relationships intact. On the other hand, even if your family and friends are reasonably well-off, you can talk to all of them, present your idea, and see how you can fund your business collectively.
Keep in mind that these efforts might go awry if someone doesn’t fully understand your vision, hence the need to provide them with equally detailed and watertight plans for the future of your company. They need to know where their money will go, and you should have a plan on how to repay their investments for those who aren’t interested in owning a portion of the business.
Getting a loan if you have bad credit can be quite a challenge. It is important that potential lenders have a certain level of trust that you will pay them back. However, if your record shows that you failed to do so in the past, getting approved for a loan becomes a bit more difficult.
Additionally, if you don’t want to risk losing your personal assets due to failure to keep up with your payments, and you don’t have any business assets yet since you’re just starting your business, this complicates things even further. Usually, the lenders would want to have at least some guarantee that they’ll get their money back in form of collateral, but that’s not always the case. Lenders that offer unsecured business loans don’t require any assets so they are a perfect option for striving small business owners that just need a little boost to get things going.
Think of your potential users as your extended family – they are the ones prepared to pay the big bucks to use your service or product, so it would make sense to turn to them even before it’s available. Enter: crowdfunding. Simply put, this is a digital shout-out via accredited platforms to all of interested parties to invest in your business. It’s a win-win when it comes to the online game, as you’ll both get the funds you need and feel out the market for the level of interest in your idea.
Even before your business goes live when your funds are ready, you’ll have a sense of how it will be perceived by its target audience and where to market your product most effectively. This is an opportunity to also allow your friends and family to invest via these platforms and get the ball rolling as others start to join in.
Building a partnership
Sometimes, when the market feels particularly hostile towards a new business and its funding, joining forces with a recognized brand can make all the difference. Even if you partner up with a micro-influencer or a young startup, both parties can benefit from the effort to get more exposure and preferably join the available capital to rise above the competition.
A perfect example of co-branding done well is how Airbnb paired with Flipboard to create even more personal and meaningful experiences for the end user. While the former is already a giant in its industry, the latter is a less-known brand that gained immense exposure and interest thanks to this effort. You can seek out businesses that share your target audience and amplify their experience by joining your efforts as well as your funds to make a more meaningful impact together.
Businesses large and small struggle to overcome their financial issues every day. Don’t let your bad credit score get in the way of realizing your professional potential, and make the most of these funding opportunities to create a steady budget for your business and let it outgrow your competition.