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Top 10 Ways To Fund Your Start-up Business

Top 10 Ways To Fund Your Start-up Business

It’s been said that it takes money to make money. The aspiring entrepreneur is often pressed to find more funds. Where can you find them? Here are some creative ways to finance start-up businesses.

1. Founder’s capital

Prepare for your start-up business by saving. It will take much more money than you planned. Consider inviting a wealthy and trustworthy friend or relative to be a co-founder and perhaps silent partner. Other people and firms who might consider investing want to see that the founders are truly committed to the venture with their own funds.

2. Friends and family

These people believe in you and your ideas. They want you to succeed. They are mostly interested in the founders and if the concept sounds interesting. Many of them say, “If you, the founders, are committed to this, I know it will go far. Count me in.” Usually, they do not conduct complete evaluations of things such as reputation, revenue, or accident insurance coverage for employees, but rather invest based on faith. Their knowledge of the founders is the key factor that helps them get the risk to a manageable level.

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Most of these supporters come in prepared to lose their investments in order to support the founders in fulfilling their dreams. Consider selling unregistered securities through a private placement offering (PPO) to friends and family who qualify as accredited and sophisticated investors. Engage security attorneys to ensure compliance with the Security and Exchange Commission (SEC) and state “Blue Sky” requirements.

3. Barter

What services or products do you have or will you have that one of your service providers wants? Rather than pay cash, barter. Explore how you can exchange products or services instead.

4. Stock options

Talented people can often be enticed to work for equity as a form of compensation. Rather than fork out the firm’s limited cash, explore setting up a stock option for employees as well as consultants and service providers.

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5. Government grants

Government funding — at the national, state, and local levels — can support development of new technology at research institutions and support entrepreneurial activity. The technology from research organizations can ultimately be transferred to start-up businesses.

Explore what government sources are available for your venture. For example, apply for SBIR (Small Business Innovation Research) grants administered through the various US government agencies. If you are a foreigner to the country, make sure you know the additional requirements. The Citizenship Bureau gives you a better idea about the importance of Country of Tax Residence and Residential Status, should you start a business outside your country of origin.

6. Corporate fees and grants

Engineering charges for consulting and customized development may be available from commercial accounts interested in applying your technology to their pressing concerns. These corporations get an early look at the product offering and have the ability to greatly influence its direction. Additionally, these firms may evolve into long-term strategic partners.

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7. Revenue from product licensing and sales

Once you have a product available, revenue from its licensing and sales activity can help bootstrap the firm. Choose projects that will generate cash to fund your ongoing operations.

8. Debt financing

Some firms find debt financing through banks and other financial institutions and investors. The funds must be repaid plus interest. For example, the Small Business Administration has a business loan program that works in conjunction with banks. However, the majority of these lenders consider your credit score status as an important factor to determining your trustworthiness.

9. Angel investors

Angel investor networks have formed throughout the country. These high-net-worth individuals are sophisticated investors interested in early-stage private equity investment in emerging firms with great potential. They may also want a management or board position in your firm as part of the deal.

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10. Venture capitalists

After considerable due diligence, these firms make private equity investments in promising early-stage companies. A venture capitalist’s primary goal is to maximize financial return while getting the risk to a manageable level. In exchanging their money for an ownership stake in the company, venture capitalists also bring business acumen, contacts, and seasoned board experience to the firms in which they invest.

Featured photo credit: Ideator Team via ideator.com

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Junie Rutkevich

Game Developer of iXL Digital

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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