Business finance, funding, overdrafts, working capital. Name it what you will, at some stage the…
How to Fund Your Dream Business From Scratch
You’ve got a great idea for a business, and you’re ready to turn it into a reality.
How do you fund your business without asking for a loan from your family? It’s the stumbling block that most Small Business owners hit at some point; how to fund your dream business.
You know your idea is a good one and you are 100 percent certain you can make it work; if only you had that first injection of cash to kick-start you into production. Many entrepreneurs at this point run through their list of financial possibilities, and sooner or later they ponder asking for money from family. After all, these are the people who believe in you and are meant to support you no matter what, right?
That may be true, but is it really how you want to begin the road to financial independence? Wouldn’t it be better and more empowering to find the money yourself? Not to mention all the potential emotional baggage that would come with a family loan, no matter how supportive they are.
Let’s look at some alternatives to family involvement to help you on the road to success:
One of the most interesting options is to use a crowdfunding site like Kickstarter or Pozible. You set up a web page, outline your idea and then market the hell out of it by asking for public donations.
In some ways, the popularity of crowdfunding has made it a more tricky option as there are so many projects asking for money! A couple of ways you can cut through the noise are:
- Get prepped– Craft a really clear, compelling message about what your business is and what your plans are. Nobody is going to give money to a half-baked idea.
- Be active on social media- Create content that speaks to the people who are going to be your customers, and if you can, put some money behind it for targeted advertising. A little goes a long way on Facebook.
- Don’t ask for money immediately- Build your story through a high-quality video and show your enthusiasm to get people interested in your idea first.
Finding the right private investor to help fund your business is an excellent way to get you started. If you can align yourself with someone who is also a well-connected entrepreneur in your industry, you could also benefit from their wisdom and backing.
You can find angel investors through good old-fashioned networking, or by joining an association. Many of these opportunities can be found through LinkedIn if you search for ‘angel investor’. Then all you need to do is get your pitching and presentation skills ready to make a lasting impression.
Not everyone is happy to get a loan from a bank, but with the right paperwork, it could be a relatively hassle-free solution. A couple of questions to ask yourself before taking this option are:
- Will I qualify? If it’s unlikely, you could end up hurting your credit rating if you get rejected.
- How much do I really need? You can determine this by creating a monthly cash-flow projection.
- Have I got the cash flow to pay it back? The banker will want to see a financial forecast for the business, and you should include the debt repayment in that projection.
- Do I have all the documentation? As many as four in five loans never close, not because they don’t qualify, but because of all the paperwork involved.
A relatively new but fast-growing solution is to join an incubator. These organisations offer a support framework that will give you the resources needed to begin in exchange for equity. They don’t just provide funding; they also provide mentorship for first-timers and a valuable network of contacts to help you grow your business.
There are exciting opportunities for getting your business off the ground if you’re prepared, passionate and willing to put in the work to achieve your goals. And none of these needs to involve asking your family for help.
“The opinions expressed by Smallville Contributors are their own, not those of www.smallville.com.au"
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