Contributed post
If you’re looking to improve your money situation by starting your own business, but you’re daunted by the task of raising the funds you need to get your startup off the ground, don’t be! Although it can be tough for new businesses to attract the cash they need, it doesn’t have to be anywhere near as difficult as you think; you just need to know what your options are and be able to work out which course of action will be best for you.
To help you with that, here are some smart ways to raise money for your startup and their various pros and cons:
Crowdfunding
Crowdfunding is becoming increasingly common, and that’s because it can be very effective. It doesn’t matter whether you’re planning to buy a pub in your local area, set up an online business or start manufacturing and selling a new product that you’ve designed, it is possible to ask people to contribute to your startup capital using various online sites, such as Kickstarter.
The main advantage of crowdfunding is that anyone can do it and you have nothing to lose by giving it a try. If your idea for a business/product is popular and you make a decent pitch, there is a good chance that you will raise the money you need.
A possible downside is that, in order to attract donations, you usually need to offer incentives, such as the product you plan to sell, to your donors, so if you don’t have something concrete to offer, it could be more difficult for you to get your campaign off the ground.
Angel Investors
Angel investors are typically entrepreneurs in their own right, they have made their own money and want to give something back by offering funds to budding new startups.
Perhaps, the biggest benefit of angel investment is not the money you will receive, but the help you will be given by your investor, who will typically do everything they can, from hooking you up with people in the industry to imparting their knowledge and experience to you, that will help you to succeed.
The biggest con of angel investing is that it can be hard to find an investor who is interested in what you want to do, but if you have a good idea and you’re persistent, this may not be much of a problem at all.
Friends and Family
Many a small business has been launched with the financial help of friends and family, and it can be a very smart way of funding your company because your loved ones will typically give you a better deal than the banks or investors, However, the very obvious pitfall is that, should your business fail, you’ll end up owing the people you care most about money, which could cause your relationship to become strained.
So, think very carefully before you go down this route; don’t borrow more than anyone can afford to lose and where possible, offer them benefits so that they have a stake in your success.
I hope this has helped you to think more about how you could possibly finance your business, especially if the banks are a no go. Good luck with your future ventures!