Startup Money Issues: How To Solve It?
Startup money issues are a real drawback to entrepreneurship, lowering your chances of success. In this article, we’ll cover the three most common types of startup money issues and share ways that you can solve them. We will also debunk some popular myths about funding as you read along!
Incorporate as a Sole Proprietor
If you are new to the world of entrepreneurship, you may not be aware that you are going to have a tough time raising money for cashflow. Business investors are used to funding companies with a business plan and experience.
When it comes time for them to gauge your experience-quite often the first thing they’ll look at is your legal structure. One thing you may want to consider when becoming an entrepreneur is incorporating as a sole proprietorship instead of starting out as a corporation or partnership. It is a little bit difficult to get funding when you are a sole proprietor, but it is easier than getting funding as a partnership or corporation.
Obtain a Loan
Another way to obtain startup money is to get a loan from your family or friends. However, if you are looking into raising money as an individual, this option is not particularly viable. If you don’t have a partner in crime, family loans are the only thing that will work for you. Otherwise, you’ll need to look into business loans through banks or business loan providers.
Make a Business Plan and Raise Funds Through Venture Capitalists
When you have a business plan and materials to show, the venture capitalists won’t hesitate to offer to lend money. However, the venture capitalist’s decision could be delayed for months or years because of the competition for funds. While you’re waiting for your chance at venture capital, try to raise money through lenders instead.
Lacking Experience
If you are lacking experience in running a business, then it is up to you to make up for this by doing your research and making your business plan as thorough as possible. You will have a much better chance of raising startup money when you can show potential investors that your business plan is well thought-out and detailed.
In addition to preparing your business plan well, consider taking courses or attending workshops that will give you the specific knowledge you need to run a successful business.
Seek out venture capital funding
Your chances of raising startup money can be greatly improved when you seek out venture capital funding. By approaching venture capitalists, you will be greatly increasing your chances of getting your company off the ground. Venture capitalists have more experience with funding new businesses than most other investors and are more likely to invest.
It is a good idea to contact as many venture capital firms as possible in your area and pitch them on your business plan. Many investors will take the time to evaluate an opportunity even if they don’t think it’s a good fit for their fund, so there is little risk involved in approaching multiple venture capital firms.
Lacking credibility
If you want to raise startup money, you will need to gain investors’ trust in your business. You can’t raise money if no one knows you exist! For this reason, it is important that you conduct thorough research on your target investors before making any significant decision. If they are well known, try and get recommendations from friends or associates who have worked with them in the past.
In addition to conducting extensive research, you should also make it a habit of showing the potential investors that their relationship with your company will benefit them as much as it will benefit your project.
Leverage your personal credit card debt
If you have already exhausted all your options in terms of raising startup money and are still unable to find it, then one thing that you may want to consider is taking out a personal loan. This is something that most investors would frown upon, but the fact is that many businesses were launched successfully in this way.
Just remember that if you take out a personal loan for your business, you will be putting both your assets and your credit rating on the line if you fail to repay the debt. It is best to raise money using more traditional means before resorting to this option.
Get a job while you are in the planning stages
If you are having trouble raising startup money, one way that you can fill up your coffers is by getting a job while you work on the business plan. You don’t have to be rich in order to start a business, as a matter of fact, many successful entrepreneurs don’t have much money at all when they enter the arena and it’s possible for them to succeed without raising startup money.
Crowdfund your project
The internet has made it possible for small businesses to raise startup money at a fraction of the cost of typical methods. Crowdfunding allows you to raise a portion of your capital by offering rewards to investors for their support. This is an interesting way that you can get your business plan off the ground because it doesn’t rely on the traditional major funding source.
Register your company with a local Chamber of Commerce
Chambers of Commerce have been found to be effective in getting startup money, especially if they have programs in place that can help you with many aspects of running a business, including economic development and training.
Don’t let your project be limited by startup money issues
It’s crucial that you’re not limited by your lack of startup money. You can have a successful business even if you don’t have access to large amounts of capital, but you will have to make sacrifices. Make the most of your resources and don’t waste time on activities that won’t get you closer to success.
If at first you do succeed, try for a repeat venture!
If you are lucky enough to raise startup money for your business, even if it’s a small amount, then consider doing it again-once is never enough when it comes time to launching a successful business.
The point is, no matter how big your business is or how far it will get, getting financial help to run your business is always a good idea. You just need to direct all your attention to finding some of it, and as fast as you can.