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6 Simple Options for Financing Your Startup

6 Simple Options for Financing Your Startup

The biggest challenge in any startup is always funding. It does not matter whether you have an award winning product, or the next big invention if you don’t have the money to bring it to market.

A lot of budding entrepreneurs have seen their dreams waste away due to lack of capital and the tightening lending conditions in mainstream banks has not made things easier.

However, despite these challenges, getting capital for your startup through alternative sources is possible.

Here are some good alternative lending options that you can consider when funding your start-up:

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1. Venture Capital

Venture capital is perhaps the most popular source of funding for emerging start-ups but it has a number of challenges. With venture capital, you will get an investment from a venture capitalist in exchange for a specific portion of your company.

Venture capital firms are professionally run companies and will only invest in startups that have shown enough potential to blow over and become big in the future. However, the challenge is that sometimes you may end up giving up a significant share of your business – a decision that you might regret later.

2. Peer To Peer Loans

Although this is an option often associated with personal loans, it is now making its way to modern business lending. As a start up, you can definitely explore peer to peer lending firms that are ready to lend money to businesses.

Peer to peer loan works very easily, you get an investment from an individual or a group of individuals and they will own a portion of your business. Unlike venture capital firms, it is actually easier to negotiate equity demands with an individual and in the end, you will not have to give up a big percentage of your company in order to get the funding you need to grow.

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3. Crowdfunding

If you feel that indeed you have a good product that can sell, you can raise money through Crowd Funding and preorders. There are so many startups that have used Crowd Funding platforms such as Indiegogo and Kickstarter to raise starting capital.

The challenge is that you need to have a very good product and a strong public relations campaign in order to attract the money you need. In addition to this, you are allowed to raise as much money as you want, but it can be difficult to arrive at the target within a limited time frame.

4. Personal Credit Lines

It is not difficult to acquire this loan as you qualify for it on the basis of personal credit efforts. You can get it easily even if you do not have any history. There are several startups which have managed to build a solid financial base by getting secured personal line or credit card loans.

Personal credit lines are a good option because they allow you to retain the control as long as you are making minimum payments.

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5. Purchase Order Financing

One of the common problems that startups face is their inability to accept large orders because of lack of financial support. Manufacturing and delivering the products requires cash.

You can solve this problem by relying on purchase order financing. The companies offering PO financing give the required cash in advance to the supplier. It allows a new business to complete the transaction process and it also helps in kick-starting the cash flow of the startup.

5. Micro-Finance Loans

A lot of people tend to confuse Microfinance loans with normal bank loans. The truth is that they are quite different. Microfinance loans are aimed at small businesses and will come at much more reasonable terms compared to normal bank loans.

In addition to this, the loans are offered by microfinance institutions and will offer a good option to secure funding for your startup.

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If your startup is commercial based, make sure to do searchical SEO so that your site is optimized for e-commerce to generate sufficient initial traction and cash flows. Generating initial cash flows without external support can be biggest proof of your success as a new start up so doing focus on this too.

Finding firms or individuals that lend money to businesses is now possible and the simple options above should be quite ideal for any new business.

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Adnan Manzoor

Data Analyst & Life Coach

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

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Featured photo credit: Austin Distel via unsplash.com

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