To start a business, one requires a lot of patience and courage as it is a time consuming process and involves an element of risk. Entrepreneurs are full of great ideas and powerful ways to implement them, but like anything in life, starting a new business requires a huge amount of money. To get the required funds one needs to approach various investors with a hope that one would be interested enough to invest. This approach of finding funds for your startup may often take years and usually yield disappointing results.
Everyone, be it a politician or a sports personality or a film actor, acknowledges that small businesses are the backbone of our nation’s economy. By investing in small businesses, they help strengthen the economy by creating jobs and supporting other companies by purchasing products and forming partnerships.
But it is quite difficult for an entrepreneur to determine which are the most lucrative funding options from the available alternatives. You may wish there were scores of investors fighting out to fund your business. Unfortunately, this doesn’t happen in reality. However, by leveraging the global outreach of the Internet, your startup can receive the funding it needs to get off the ground. From our experience in the startup environment, we have some advice for you to help you locate the best finance deal for your business idea(s).
- Find Your Niche: Always remember that your idea has something special to attract the investors. Find your niche to help those in underserved areas. There are grants tailored to either specific business owners or business ideas that can help get your idea off the ground. As you seek funds, you’ll be able to summarize in a few words what sets your business apart from others. This is one of the additional benefits that you get because of your niche. Research any of the investors you approach to discover those financiers who may have a particular interest in what your business offers.
- Approach for a Grant: Nothing beats a grant when it comes to finding your finance sources. Grant is the money provided to you, free of charge, that you can invest for your startup. Finding and getting these grants is extremely difficult, but you’ll definitely never get a grant if you don’t try. Grants are available based on the theme of your business, as well as your own demographics. There are grants for minority business owners, women, single mothers, and so on. In order to apply, you have to approach them and follow the procedure. Most grant programs require extensive proposals and hence you need to mention every minute detail of your organization.
- Contesting and Participating in Startup Events: There are a number of contests that encourage innovation by offering a large financial reward to support small business startups. In India, many companies organize startup events and invite investors, government agencies, and startups. It is a platform where everyone gets an opportunity to meet and share their views and also to present their business ideas. To overcome the odds in the path of success in these contests, find ways to make your project stand out in the crowd. To do this, you’ll either have to present your idea in person or pitch it by writing to the concerned people. The idea has to be as original as possible to grab the attention of investors.
- Crowdfund Your Idea: Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people. It can be executed through mail-order subscriptions, benefit events, and other methods but nowadays it is performed via internet-mediated registrations. Crowdfunding is a form of alternative finance, which has emerged outside the traditional financial system. There are many online platforms that provide the perfect platform for businesses to locate funds for a new startup. Its increasing popularity has led to an increase in competition, which means unless your business can catch the attention of the investors, it is most likely to remain in the list of large number of projects that go unfunded on these sites each month. The most successful campaigns seem to come with a good business plan or idea. Therefore, you must share what led you to create your concept and the passion you have for seeing that concept see the light of the day.
- Find your Angels (Angel Investor): Angel investors are the rich lot who are interested in investing in your great ideas and in return they usually seek a sizable hold on your company. If you’re comfortable exchanging equity for financing, an angel investor or two might be just the solution you’re seeking for your startup funding. After you’ve decided to look for such investors, the next challenge is in finding an angel investor who is looking for a project like yours. You can find them through some agencies such as Business Development Centers, located around the country, that can help connect entrepreneurs with investors.
- Opt for a Loan: There are a variety of specialized options available, including loans to help with disaster recovery and microloans for small businesses or for startups. This can be easier than trying to secure a bank loan, especially since restrictions have tightened. In some countries, even the government provides loan to the startups who have great business ideas. However, if you want to contact a bank for a small business loan, make sure you have as many details about your proposed business as possible. This includes complete finance details that disclose exactly how the loaned amount will be used. It might be best to start with smaller, community-based banks, as they will have a thorough understanding as to how your small business will fit into the existing local landscape.
These advices mentioned above can help you find the most suitable funding option(s) for your startup and kick start your business. There won’t be any complications in finding the best financing option, if you do your homework before approaching any of the sources. You have to struggle until your idea reaches the potential investors by creating a good business plan and working on your ideas.