However, in order to be able to do all of that, you first need to get your finances in order. In case you are not sure what your options are, take a look at the list below to find out more.
Use your personal savings
Depending on the size and type of the business you plan to start, you might already have the finances in your savings account. Some businesses don’t require a lot of startup money and if you’ve been saving up for a couple of years, maybe you don’t need to borrow anything at all.
Turn to family and friends
If you need a small amount of money, maybe you can ask your family members or some friends to help you out. These people know you and know whether you are trustworthy enough for them to invest in your company. One big plus for this option is that you might agree on a flexible schedule and lower interest rates when it comes to repaying the loan. However, keep in mind that you need to draw a line and explain to them that they do not have a say in how you run your business. Furthermore, it is not uncommon for relationships to get strained due to money disputes, so try not to let this happen to you.
If you are confident in your idea, you can try crowdfunding. Carefully work on your proposal and campaign as this will be crucial for attracting investors. Give as many details as you can and explain how you think you can improve people’s lives. Platforms such as Kickstarter and Indiegogo can help you in this endeavor. Be aware that there are a few kinds of crowdfunding. Debt-based crowdfunding means that you will have to pay back the money; rewards-based is when investors expect a product or service once your business is up and running; and lastly, if they don’t expect anything in return, it is called charity-based crowdfunding.
Apply for a personal loan
You could also think about applying for a personal loan. Look into various banks, credit unions and online options to find a loan that will be useful for your business. However, keep in mind that banks evaluate your credit score to decide whether they will lend you money. In case your record is not great, don’t worry as there are ways to improve it. On the other hand, online platforms such as OurMoneyMarket offer rates unique to your situation, which means that even if your score’s not the best, you still get a chance to apply.
Consider peer-to-peer lending
If you opt for peer-to-peer lending, there will usually be a platform where you have to register, which matches potential lenders and borrowers. Your interest rates will be based on your credit score, but you will probably have several options to choose from. That means that you can pick the solution which works best for you. Plus, this alternative is known to be much faster and simpler than getting a traditional loan from a bank.
Look into government grants
Depending on where you live, you should look into some local or government grants which help small businesses. However, bear in mind that these might not be easy to obtain so it’s important to see whether you meet the requirements. Furthermore, these grants are usually used for expanding a business and dealing with working capital, so check whether you can use them to start a company.
Solve your cash flow troubles
In case you’ve already opened your business but are struggling to make ends meet, you have other options in addition to government grants. To solve your cash flow problems, you can look into short- and medium-term business loans, which can be used to cover payroll and acquire inventory and equipment. Furthermore, there are also equipment loans which are used for buying machinery, vehicles and other necessary gear. Business lines of credit and invoice financing and factoring are also useful as short-term solutions.
In case you don’t have enough money to start the company on your own, visit a few banks and see what options you have. If nothing pans out, it’s good to know that there are some useful online alternatives.
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