You have a great idea for a new business. You have identified a previously underserved niche, and you have created the perfect product or service to fill that gap. Now it is time to turn your entrepreneurial dreams into a reality, but taking that next step is often the hardest part of the process.
If you want to get your new business venture off the ground, you will need cash to make it happen, and getting that startup funding is not always easy. When it comes time to raise capital for your new business, you need to think creatively, seeking out all the options and choosing the one that works best for you and your new business. Here are 10 places entrepreneurs can get the money they need to finance their dreams and build their businesses.
1. Family and friends – If you believe in your entrepreneurial dreams, those around you probably share your beliefs. Family and friends can be great sources of support and cash as you begin your entrepreneurial journey.
2. Small business incubators – Many state and local governments have set up funds to get promising new businesses off the ground. Signing up for these programs could net you the cash you need, so you can stop dreaming and start achieving.
3. Mentorship programs – If you want to be successful in business, it helps to get the advice of those who have been there. Mentorship programs can be great sources of advice, but in some cases the mentors will be willing to pony up some cash.
4. Crowd funding sites – Sites like Kickstarter and GoFundMe let inventors and entrepreneurs take their case to the customer, raising startup capital in exchange for products and services. These direct funding channels can be particularly attractive for tech-savvy entrepreneurs, but they are open to everyone.
5. Bank loans – Bank loans can be a ready source of cash for promising business owners, and you should not overlook this option. If the first bank turns you down, you can always shop around for the money you need.
6. Peer-to-peer lending – When banks say no, peer-to-peer lending sites can provide the cash you need. The interest rates may be higher, but getting funding through peer-to-peer lending channels is often easier and less restrictive.
7. Retirement accounts – While not optimal, taking a small amount from your retirement account could give you the cash you need. You should proceed with caution; pulling those funds prematurely could subject you to costly income taxes and additional penalties.
8. Credit cards – Also not optimal, but credit card financing can work in some cases. If you have a low APR and expect to be cash-flow positive quickly, tapping your credit cards for startup cash could make sense.
9. Taking on investors – Giving investors a piece of the business in exchange for startup cash can be a good way to raise money. The success of this approach will depend on a number of factors, including the nature of the business and its appeal to would-be investors.
10. Venture capital firms – Venture capital, or VC, firms have funded many a startup, including some of the most successful businesses in the tech industry. If you can attract quality VC funding, you could get the cash you need.
Getting the cash you need to fund your great idea is not always easy. In many cases finding funding is far more difficult than coming up with a powerful business idea, and that can stymie your plans and stifle your entrepreneurial dreams. Even so, there are things you can do to get the funding you need, including the 10 options listed above.