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Your dream of starting a new business and getting it off the ground may seem like an impossibility, but with tenacity, patience, and the right plan in place, you can make anything happen. The most difficult part is actually getting the funding you need to make it all work, but there are some great ways you can acquire the money needed to start things rolling.
It’s not easy going it all by yourself. Hopefully, with these tips, you’ll start on the right road to creating a successful business.
Developing a Business Plan
Before you can ever start running your business, you have to first ensure that you have a plan in place as to how it’s going to operate. This is because the sources for funding want to know that there’s a sound plan in mind to prepare for the future. Having a business plan beforehand also increases the success rate of the business.
Going in blind and believing that you can make things up as you go along is how your business will fail. Investors will want to see any financial projections before they even decide to offer you any money, so buckle down and start putting a plan together.
But where do you start, exactly? A good place to start is to conduct a market analysis. Look at what your competitors are doing and start collecting information into a binder as a basis for your business, then tweak the details to your needs.
Secondly, you want to define the roles of managers and how everything is going to operate within the company. No detail is too small to be covered, so make notes as ideas come to you. Lastly, the most important part is having financial projects for the next three to five years. Don’t inflate them in any way; make realistic projections of what can happen in the future.
Visiting the Bank or Contacting an Online Company
The next step in your big venture is to consult loans or funding companies to get you started. You can go by word of mouth, do some research online, or do a review check on which companies are highly rated by customers.
Your first big step should be to your local bank, however. You may already have a relationship with them, and they would know firsthand how financially reliable you are since they’re looking at your account numbers every day. Don’t be afraid to set up an appointment with a loan officer and be there on time, with your financial plan to present. You may discover that you qualify for a number of loans that pertain to certain aspects of your business, such as whether you need an equipment appraisal.
In the event that your bank denies your application, you can always consider getting a personal line of credit from your bank or another online company to help you out. The point is that you don’t give up when it comes to getting the money that you need to get your business going.
Consider Venture Capitalists
Venture capitalist firms are always eager to invest in the early stages of a company, but it does come with the price of an equity share. After all, they are putting their money on the line. It means giving up a portion of your business to them, but they will front up the expenses to get the business rolling.
Having a connection to a venture capitalist also connects you to resources that you otherwise wouldn’t have on your own, so it’s not an entirely bad idea. Keep in mind, however, that there is some pressure to pay them back as soon as possible. They don’t want a return on their investment in ten or twenty years; they want it as soon as possible and will structure the agreement you make with them to be in their favor in this regard.
Consider Getting a Strategic Partner
Having someone else at your back can be a great idea, not only to generate ideas and get the ball rolling but to also help financially. The majority of businesses that have partnerships have seen accelerated development in their fruition.
With your bank accounts combined and any loans that you acquire individually, you have a better chance of having things financed and increase your chances of success. And in the event that something goes south, then you’re both financial responsible, meaning that you share the costs instead of carrying the burden all by yourself.
The best strategic partners consist of people you can trust and rely on, especially in the financial aspects of the business.
Angel Investors May Be an Option
They are much different from venture capitalists, though the relationship may look the same. They do start off taking an equity share of the company in exchange for their investment, but there is also the option for that funding to be exchanged for convertible debt. Angel investors tend to be genuinely interested in your business instead of only being out for money.
For this reason, they can be a great source of professional advice and help you manage your business properly from the ground up to minimize risks and mistakes. Remember to have a business plan in place first, however, before you arrange a meeting with one.
Minimizing Initial Business Costs
It’s time to go back and revisit your plan to see where you can minimize some costs. Perhaps you can go with a different supplier or choose equipment that is more affordable. Find a cheaper space to rent or decide to work from a home office. No matter where you find corners to cut, having a lower funding sum is definitely more attractive to lenders and takes a lot of burden off of your shoulders.
If you’ve got good negotiation skills, consider bartering or establishing a relationship with suppliers that eases the burden on your wallet. Finding the right source to fund your business takes time and effort, and not everyone is going to find the perfect option on their first go. Being open-minded about your prospects and doing your research sets you up for success when getting your business off the ground.
In comparison to other ways of raising capital, venture capital gives startup companies significantly more resources. Whether it be through a bank loan, crowdfunding, an angel investor, or equity financing, venture capital usually gives you the most funding.