You’ve got the business idea, you’re written the business plan, now all you need to get your startup off the ground is the finances. For lots of entrepreneurs, this is where the dream fails to become a reality.
Finding financial support for your business is one of the biggest hurdles that you’ll face. Banks might be reluctant to lend and going down the route of using credit cards is a risky move to take, potentially putting yourself into a hole that you cannot get out of. That’s not what you need before you’ve even started.
That’s why you sometimes need to think outside the box to get the funding required to kick start your new company. Here are three ways to finance your new business that you might not have considered yet.
If you can’t raise the money to get your startup off the ground from traditional lenders, then why not turn to the general public? Crowdfunding is becoming an ever more popular way of financing projects and ideas. You essentially ask people to make a donation towards getting your business off the ground. There could be many reasons for them wanting to do so, whether it be an incentive which you offer such as discounted goods and services once you are up and running or simply because they buy into what you want to do and believe it could be a force for good in the world. Whatever the reasons, we know that crowdfunding can work brilliantly – as these five crowdfunded projects that became million-dollar companies can attest to.
Look at borrowing that is specific to your sector
Some sectors have financial aid that is very specific to them and what they do. Take the real estate sector, for example. Lenders such as My Commission will offer realtors commission advances up to 90 days ahead of the estimated closing date. That can allow you to focus on a long-term business strategy without having to worry about inconsistent and lumpy cash flow. Have a look at what similar offers exist in your area of business.
Pledge some of your future earnings in exchange for financing
If you are convinced of your chances of success, then you can bet your future earnings on financing right now. That’s what Kjerstin Erickson has done. The 26-year-old has pledged that anybody who invests $600,000 in her will in return get six percent of all her earnings for the rest of her lifetime, organized through an online marketplace called The Thrust Fund. It’s a bold strategy but it can attract financers for two reasons. The first is that you have to admire Erickson’s confidence in that she believes she can offer a return on that investment. The second is that for a financer with deep pockets, $600,000 may not be a lot of money now – and if she ends up becoming the next Bill Gates or Mark Zuckerberg, then they’ll be making some serious cash simply from picking up six percent of her pay cheque each month.