The biggest roadblock that most entrepreneurs come across when it comes from turning their gem of a business idea into a multimillion-dollar diamond is funding.
Unfortunately, it’s very rare that you’ll find a rich investor just waiting in the wings to give you the money you need to get your startup off the ground. It takes hard work, perseverance and more than a little bit of creativity to start a business.
Sounds tough, doesn’t it? Yet, where there is a will, there is a way. You might be able to bankroll the whole business through credit, or you might be able to find a hidden dragon willing to invest, presuming you are prepared to give away a portion of the business for their investment.
Here are eight ways to get your startup funded.
Barter your skills
You can barter the skills or services of your startup in exchange for help to get you off the ground. Say you are an SEO specialist who desperately requires office space, but the cost of renting is proving hugely prohibitive. Find another local business who own their own premises and ask if you can take over a section of office space in exchange for improving that businesses search visibility. If your startup offers something other people will want, then use that to help you get a leg up.
You’ve probably heard of crowdfunding, seeing as it can be used to raise money for virtually anything. Sometimes it’s the financially stricken student looking for another coffee to get them through exams or the journalist who is looking for a donation from an appreciative reader. When it comes to startups, crowdfunding can be used to get people who are invested in your idea to donate to help get it off the ground. Some startups will reward them by offering the final product for free or at a discounted rate at a later date; some will offer freebies such as a t-shirt or other assorted merchandise while other members of the public will donate just because they believe in what you are doing and don’t expect anything in return.
Negotiate an advance
Can you convince a client to pay you in advance for your services or product, and use that money to get the business off the ground? It’s a difficult one because you are going to have to convince somebody of the merits of what you can achieve before you have achieved it.
Produce a white label product
A white label product is a slight twist on the advance and one that holds more appeal for already established businesses. Rather than another business paying your startup in advance for a service or product, you’ll be providing that business with the service or product for them to sell on as their own. The negatives are that you may not get the credit for what you are producing, but the positives are that you’ll be getting paid handsomely for your services.
Seek a bank loan or credit
A bank loan or credit-card loan is difficult to get these days. Banks will be reluctant to front the cash to get your business off the ground unless they’re convinced it’s going to one day make the Forbes Global 2000 list of the world’s largest public companies, or you are willing to put up a serious amount of collateral. If you have a good credit history, you might be able to go partway to funding your startup through credit, and if you don’t, there are always options offering the best credit cards for people with no credit.
Join a startup accelerator
Banks might not be particularly willing when it comes to funding startups, but there are plenty of startup accelerators out there who can offer both funding and expertise. This is particularly true in the technology sector where major universities, community development organizations and even larger companies are willing to give free resources, facilities, consulting and even cold hard cash.
Request a small-business grant
There are over 1,000 different types of federal grant programs available across the United States for a variety of startups, particularly those looking to make strides in the worlds of medicine, education, and technology. The process of finding and applying for the right grant is a lengthy one, but the good news is that you won’t lose any equity or have a loan with a massive interest rate stacked against you to pay off later.
Approach venture capital investors
The good news is that venture capitalists are always on the lookout for new startups to invest in. The bad news is that their investments tend to come in the millions, meaning that you’ve got to have a serious business plan led by a proven team and ready to start driving a return on their investment as a matter of urgency. There is no harm in approaching a venture capital investor if you think your startup fits those criteria and it is often best to go in with a warm and professional introduction.
Seek out a benefactor
There are plenty of wealthy businessmen and women out there who started at the bottom of the pole, just as you are trying to do. They know how difficult it can be to get a startup off the ground and as such, they might just be willing to give you a helping hand. If you can find a likeminded individual in either your locality or your field, then why not approach them for help? You could end up with much-needed expertise and wisdom as well as a monetary boost.
Ask friends and family
If those closest to you don’t believe in what you are doing, then why should any serious money lenders with no personal ties to you do so? It doesn’t matter if you come from a poor background and your friends and family can’t offer you much – sometimes, their belief and faith in what you want to achieve can be almost as important as any blank cheque.