Coming up with a great business idea that could potentially turn into a profitable enterprise is more than exciting. Many entrepreneurs venture out into the business world to try and make a name for themselves and turn their ideas into a reality. On the other hand, some entrepreneurs give up on their dreams because they fear the competition on the market or they lack the necessary funds to properly grow their business.
Nevertheless, finances are, and always will be, the top concern and top priority for any business owner. As a matter of fact, financial security is one of the most important factors for business success. Entrepreneurs who fail to gather enough financial support for their business ultimately fail. However, there are ways you can fund your business idea even if you don't have enough resources on you. Here are a few smart ways you can do that.
Ensuring support from an angel investor is one of the best ways to turn your business idea into a reality. Not only can they secure enough funding for starting your business, but they can also cover the expenses necessary for a proper business growth and future development. In return for their assistance, angel investors ask for 20 to 25% ROI. The catch is getting them onboard in the first place. Angel investors won't consider funding just any business idea.
You have to be passionate about your businesses and not looking to get rich fast. Angel investors can easily spot your agenda and will turn you down just as easy. You'll need to present your idea in a way that shows you have done your homework. A good business and marketing plan is a must, as well as competitive analysis and social proof. In short, you have to show investors you can handle your business, as well as the ups and downs that come with it.
Venture capitalists are also investors that may be willing to endorse your business idea. However, unlike angel investors, venture capitalists look for ideas that can get very profitable fast. If you have a multi-million dollar business idea with an exit strategy, you'll have no problems securing funds from these investors.
However, for their support, venture capitalists will ask for a share of your company, meaning they get to be included in important decision making, while they share a percentage of your company's profits. In addition, venture capitalists are careful when it comes to their investments. That's why they'll expect to see a return on investment in three to five years tops. You'll also need to present a business idea with a pitch that will prove your idea is solid and well designed.
If you need to secure funds and turn your idea into a business, then crowdfunding is something you should definitely consider. Crowdfunding platforms, such as Indiegogo, GoFundMe and Kickstarter allow you to present your business idea to your target audience, i.e. the crowd. If the crowd likes your idea they'll donate funds to help you develop it further. It's important to understand that crowdfunding isn't a long-term funding source for your business. Be creative with presenting your idea. Consider consulting a professionals from the industry, such as Carbon8, to help you create recognizible brand that will audience support.
Crowdfunding helps you gain enough funds to jump-start your idea into a business. That way, you don't just get funded, but you also create a basic consumer base that will support your business. The catch is to set a limit on how much money you need and also a time limit for funds to be raised. However, be mindful of the crowdfunding platforms you choose. Some may impose collector fees on funds raised, while others won't let you keep the money if you haven't reached the limit on time.
If your budget lacks the funds to fully support your business idea, you can always take a business loan. If you planned everything right, you can use the funds to develop your business. Moreover, you can repay the debt with interest and still have enough profits to continue operating normally. However, getting a business loan isn't as simple as it sounds. Banks tend to be sketchy at best when considering your loan application. What's more, they take in many factors into consideration before they decide whether to approve a loan or not.
For instance, if you have a bad credit score, banks might charge you with extra interest rates or deny you the loan altogether. In addition, it may take a long time for banks to review your application, which is bad if you need a loan approved fast. Luckily, there are alt
ernative sources of funding that will provide you with fast loans, even if you don't have a perfect credit score. Furthermore, alternative lending is more flexible and business-friendly, which means you'll find a deal that suits you best.
There are many ways to financially secure your business idea, even if you lack the means to turn it into a business. Make sure you have a business plan first, so that you'll know that your idea will bring profits once it becomes an actual business. Then you can choose which funding option is the best for you.