As Inc. states, “Nothing is scarcer than cash (except maybe sleep) when you’re just starting out.” One of the most common questions that budding entrepreneurs ask is, “How do I find the money to start my business?” While there are a variety of ways to obtain funding for your business, there isn’t a one-size-fits-all answer.
So if you want to start your own business but don’t have the funding, you can still get it off the ground. Whether you are a millennial making your first foray into business, or a seasoned entrepreneur looking for a fresh start, here’s a number of ways to raise the funds you need to launch your venture:
Have a detailed business plan
A business blueprint is the foundation of every successful business, as it maps out the course of the enterprise for several years. Without proper business plans, investors will not see the value of investing in your business. Martin Zwilling, the veteran startup mentor, says that, “to investors, startups without business plans are just expensive hobbies.” According to the entrepreneur, “one of the quickest ways to kill your credibility and your startup is to offer a poorly written business plan, or none at all.”
If you want to secure sufficient startup funds from lenders, you must be able to show them a detailed business plan. It uncovers the opportunities you have identified in the market that will bring profits – if funded. Additionally, in the business plan, you should indicate measurable goals that will convince lenders to support your idea.
Begin with Bootstrapping
When first getting started, many entrepreneurs use “bootstrapping,” which means financing your company by scraping together any personal funds you can find. This typically includes your savings account, credit cards, and any home equity lines you may have. In many cases, using the money you have instead of borrowing or raising is a great approach – in fact, some entrepreneurs continue to bootstrap until their business is profitable. This can be beneficial because it means you won’t have extensive loans and monthly payments that bog you down, especially if you run into snags along the way.
Network with the right people
You’ve probably heard it before, networking with success-oriented individuals will enable you to significantly grow your business. Professional networking is healthy for all sorts of businesses and it can help you acquire the funds to start a new enterprise. When you’ve done a solid amount of face-to-face networking, you can also take advantage of these networking skills online. You can use a crowdfunding site to raise money to start your business. Set a goal to raise a particular amount of money within a specific period and use the power of the crowd.
Get a Loan
Lending standards have gotten much easier. Platforms like Paylater, Renmoney, Kwikcash, etc afford funds for small business lending. So why not apply?
Attract an Angel Investor
You also will probably eventually need more capital to really get going – to hire people or get office space, for example. You’ll likely need to reach out to outside investors. A good place to start is angel investors, usually established business professionals with high net worths who are looking to invest in promising companies. If you find the right angel investor, you may benefit from their expert advice and management skills.
When pitching an angel investor, all the old rules still apply: be succinct, avoid jargon, have an exit strategy. But the economic turmoil of the last few years has made a complicated game even trickier.
[READ ALSO: 5 Money Mistakes You Might be Making]
Raise Money from Your Family and Friends
Asking your friends and family for money might seem like a daunting prospect but tapping those closest to you is often a good first step before getting external funding. These are the people who love you and trust you. Most importantly, they believe in you and your potential. And hey, it can never hurt to ask.
Before you ask your friends and family for money, you should have a business plan ready. This way, you can explain to them exactly what you’re selling, what you plan on charging, how you’ll make money, and whether you’re asking for a loan, an investment, or a gift (i.e., whether or not they should expect to get back any money they put into your business, and if so, how much).
Look for a strategic partner
Getting a strategic partner for your new business can help accelerate the development of your business. Your partner has a bank account as well. Between the two of you, you might have enough money saved to get your startup off the ground. If not, it’s another person to help you secure funding through the other methods outlined in this post. Partners also reduce your liability. You won’t be on the hook for as much if things go south.
Commit to spending only what you have to, which you can do when you determine what you need, want or can wait to buy.
Maximize your budget when you start small with the bare minimum. Then upgrade slowly as you can afford it.
Do It Yourself
Until you get your business off the ground, keep your staff roster light and try to do as many tasks as possible by yourself.
[READ FURTHER: How to plug your spending leaks]
Finding funding can be the hardest part of getting your business off the ground, but also the most rewarding. Once you’ve saved, gotten approved for a loan, or found other people to invest in your business, you can get back to or start your dream job! Though it can be a long road to success, finding allies along the way (whether they’re friends, angel investors, or venture capitalists) to help keep your business afloat can make all the difference in the world. Good luck!