3 Clever Ways to Finance Your Business
Nobody ever said that starting your own business was easy—and as a new business owner, you know that it’s anything but. You’re quickly catapulted into a world of financial planning, long-term projecting, and endless estimating and chance-taking.
Getting your business off the ground can be extremely costly, which often deters newcomers from following their dreams. However, with the right tips and strategies in mind, you’ll be able to tackle it all without breaking a sweat.
Securing funding is one of the most significant pieces to the business puzzle, and takes plenty of painstaking work to put together. Using this guide, we’ll let you in on our most tried and true ways to finance your business in no-time.
Business Cost Considerations
Before taking a closer look at the methods of securing funding, you must first understand what exactly your funding is going toward. Here’s a helpful list of common expenses you should expect to see when starting a business:
- Phone bill
- Office equipment, appliances, and supplies
- 401(k) match
- Health benefits (health insurance, dental insurance, vision insurance)
- Advertising and marketing efforts
- Taxes (income tax, sales tax, payroll tax, property tax, etc)
- Insurance (renter’s insurance, property insurance, casualty insurance)
How to Finance Your Business
With a more comprehensive glance at the costs you can expect to pay as a business owner, let’s take a look at the different options you have when securing funding. From loans to fundraising and everything in between, this list will serve as a great starting point to get your company up and running.
Tip #1: Take out a Loan
Taking out a loan is one of the more obvious solutions for businesses to obtain the money they need to accommodate the costs of running a business. Keep in mind when you take out a loan, you introduce debt into the picture, so it pays to survey your needs closely, so you don’t go overboard.
Consider these common loan options:
- Asset Loan: An asset-based loan uses your assets instead of your income as collateral. Generally speaking, asset-based loans are excellent choices for new businesses because items such as inventory and equipment can be used to secure the funds they need.
- Bank Loan: Traditional banks can lend you money to help your business get rolling. On your search for a bank loan that makes sense for your business, make sure to be on the lookout for low-interest rates and good agreement terms that won’t come back to haunt you down the road.
- SBA Loan: Did you know that the U.S. Small Business Administration offers its own loan designed to aid aspiring entrepreneurs? Targeted at business owners who are unable to secure a bank loan, the SBA loan can provide the funding you need, so long as you meet their eligibility requirements.
Tip # 2: Consider Crowdfunding
Though crowdfunding is typically used for a single project, it can also be a clever method to use when opening a business, purchasing expensive equipment, or rolling out a new service. Crowdfunding itself is simple. All you’ll need to do is find a trustworthy crowdfunding site, write a description detailing your financial need, set a monetary goal, and share the post.
Tip #3: Ask Friends and Family
Like most entrepreneurs, your circle of friends and family are your number-one supporters and they want to see you succeed just as much as you do. When starting a business, don’t be afraid to ask those closest to you for a monetary donation or helping hand, so you can get a leg up on your dreams.
Do be wary of toeing the line with your inner circle as you don’t want to sever ties with loved ones over a donation that went to an aimless business plan. Be sure to have a well-thought-out mission and plan so everyone can feel confident about where their money is going.
Though securing funding for your business may sound like a perilous feat, it isn’t as scary or daunting as you initially perceive. Using these helpful tips, you’ll be able to secure the funding you need to turn your business dreams into realities.