Do you have a startup you’d like to bring to the world?
Many of us fanaticize about quitting our day job, becoming our own boss, and gaining financial freedom by doing something we love beyond words
The intrinsic barriers that come with building a startup company is what keeps many out of the entrepreneurial game.
The single most daunting hurdle that stops the majority of people from ever launching is the same one that keeps them locked in soul-sucking jobs: Money.
Obtaining the necessary funds to begin a business can be a frustrating and arduous process; no one will argue that. But in today’s world, there are more options, tools, and platforms available to business owners than ever before; this this has made acquiring startup funds a tangible reality.
In fact, if you’re willing to think outside the box you may be surprised at how accessible your business dreams are. For example, a service called CloudKitchens allows restaurateurs to grow and expand by renting a ghost kitchen in Austin, Los Angeles, and many other cities. Coworking spaces allow consultants to “fake it until they make it” with a legitimate office address. Phone answering services do the same.
If you’re ready to join the ranks of those who left behind the proverbial safety net, I’ve got the resources for getting your startup funded.
Don’t Fear the Small Business Loan
Stop cringing; loans are not what they used to be. This is a perfectly viable way to get your business launched.
There are two types of loans to consider: Small Business and Personal.
Let’s deal with the small business loan route first. Since most banks won’t make loans to startups, a Small Business Administration (SBA) loan is your best hope. There are several SBA loan programs to choose from, though this is not who actually makes the loan. The SBA merely provides a guarantee for the loan if the applicant passes the screening process with an accredited SBA lender.
SBAs are particularly beneficial as they can help startups acquire funding, informational resources, and mentorship options.
To make sure that you obtain the lowest financing costs available, it is wise to use a business loan calculator to figure out a loan’s APR and get the best pricing possible.
If you have long-standing and satisfactory relationships with a bank, you could attempt to procure a business loan. If a loan is at all a possibility, be prepared to enter into an extensive loan application process that will include collateral for the loan.
Your second option will test the level to which you’re willing to be humble and ask for help. There are countless stories of successful entrepreneurs that launched their business with help from family and friends. If you are fortunate enough to know someone (or a collection of someone’s) who has the resources to and willingness to fund your company, this can be an ideal situation as it significantly cuts down on the paperwork and red tape you have to deal with.
As an established rapport already exists with your potential lender, it’s much easier to have open and honest conversations about the risks and rewards of the venture.
Be aware, however, that personal loans come with some significant potential downfalls.
Considering that more than 50% of startups fail in the first 4 years of operation, you are risking your relationship with whoever puts up the money.
Additionally, friends and family members likely don’t possess the experience necessary in order to provide guidance or help with business-related questions. This could also have adverse consequences on your business and relationship.
Those are the conventional options. Let’s move to the myriad of digital opportunities that can help you acquire the capital you need.
Specialized Funding Platforms
The online world enables startups and small business owners to gain all of the necessary resources for building a business. There are now a plethora of digital platforms that cater to entrepreneurs in need of funding.
Alternatively, platforms like FundingPost, Angel Investment Network, and Gust all help entrepreneurs and startups to connect with angel investors across the globe.
Each of these platforms has their own unique spin on the process so it is necessary to identify which is the right fit for you.
FundingPost connects entrepreneurs and investors at physical events in over 23 cities.
Angel Investment Network connects hopeful business owners and venture capitalists in the virtual space.
Gust also operates in the digital realm, but provides a variety of other tools and council for entrepreneurs to leverage along the way.
If none of these sound like a fit for you, there is yet another powerful route you could go to acquire money.
Start a Crowdfunding Campaign
Crowdfunding is an increasingly popular option for startups. The World Bank has estimated that crowdfunding will become a $90 billion industry by 2020 and many others have predicted that this medium will have surpassed the venture capital industry by the end of 2016, though this has yet to come to fruition.
For these reasons, platforms like Kickstarter, GoFundMe, RocketHub, and similar websites are particularly viable funding destinations.
Additionally, Indiegogo recently announced its entrance into the equity crowdfunding space through its partnership with Micro Ventures. This makes Indiegogo a particularly appealing option for startups as the site receives more than 15 million visitors per month.
Raising money can certainly be an intimidating and (at times) disheartening process. Thankfully, there are now an abundance of options for entrepreneurs to rely on. If you find yourself rejected from certain institutions or platforms, simply refine your pitch and move on to the next one. You can even use a combination of these options to turn your startup dreams into a reality.
Stay diligent. Don’t lose your passion. Persistence is always the secret sauce to success.