7 Tips on Funding Your Business Idea
Get a Loan (and Build Your Business Credit)
Business credit will be vital as your idea becomes a reality. It takes time to build, and it's not a part of your personal credit score. Getting a loan in the name of your business is usually the best way to build credit. The catch is, most banks want proof that your business has been profitable for a while before they'll approve a business loan.
What other loan options do you have? The answer is personal loans of all kinds. The range from the fast, short-term loans you can get at checkintocash.com to the long-term lines of credit you can get at your local bank (provided you have excellent credit and a good reputation with them.)
Cut Back and Bootstrap It
Using your savings may not sound like the most impressive way to fund your business, but it might be what you have to do. Lots of entrepreneurs built successful companies while working a day job or two. It's not fun, but as long as you keep adding just a little bit every day, you'll be working on your idea full-time before you know it.
Grants can get very specific. The more specific a grant is, the less competition you will have. If your business has something unique to offer, your chance of being awarded a grant is relatively realistic. Whether you're looking at women-owned business grants, grants for people that come from low-income backgrounds, or grants for businesses based near a river in Illinois- you will likely find something. When you do, send in the best application you can and be prepared to wait.
While grants can make a considerable difference to small businesses, they aren't reliable sources of funding. They can take a long time to get even after your plan has been approved. However, if you are still in the early stages of your business and have the time, grants can offer some advantages over nearly any other type of funding.
Sure, you could find an angel investor or a major venture capitalist to bankroll your venture- but it's not likely. Less than 1% of startups are funded by VCs or Angel Investors combined. The cash provided by friends, family, and local sponsors makes up nearly half of all business funding.
If you have a business idea, try pitching it to your family, friends, and your local small business associations. You are pretty likely to find a backer. If not, the chances are good that you will at least find a mentor, maybe a successful business owner from your community, or a retiree who can help you write a few grant proposals. You never know what resources you'll find until you get out there.
Become Crowdfunded
There are some ways to become crowdfunded these days. You can choose to run a Kickstarter or IndieGoGo campaign to fund a large project in one go. Alternatively, you can sign up for something like the thriving Patreon or Kickstarter-owned Drip to be funded as you work. With websites like these, you get paid as you create whatever it is your business creates. It can be anything from meal plans to webcomics.
Start Taking Pre-Orders
Once you have a solid plan but need the funding to set in it motion, the timing could be perfect to set up pre-orders. Before crowdfunding took off, pre-orders were still big business. Creating a website with an order form, making it clear when you expect products to ship and what benefits ordering early will grant to your new customers is still the basic idea. Once you have your fulfillment plan and website in place, all you need to do is drive traffic to your pre-order page.
Start With Something Similar
Sometimes, when you have a big idea, it's easier to chip away at it than it is to find enough funding to cover every detail. If you're planning to launch a skincare line, start by building an audience for it. If you want to create a photography course, write an ebook first. Not only will these smaller actions help clarify your idea, but they also give you a running start and earn you a little, or a lot of, income. If you get enough momentum, you might even attract an investor.
