Category : Startups
One of the most pressing questions for young entrepreneurs is how to find the necessary funding for starting and running a company. Many great ideas have gone to waste because it takes a completely different skill set to develop a project, than to think of it.
Regardless of the way a business gets the much-needed capital, it’s important to note that it represents a significant change in a way company operates. When there’s another entity involved, businesses need to start dealing with responsibility towards those who loaned them the money in question.
A strategic partner
If you already know that there’s a market waiting for your product you might be able to get an advance on it from a strategic business partner or customer. Forming these relationships early on can put your business on a map, by association alone. However, tying yourself up to a single large client can also be a dangerous way to go because you’re putting the future of your business into to the hands of a single partner. Make sure that the deals you’ve made early on are open for negotiation after you establish your business better.
Incubators have become very popular lately, especially in funding tech startups, but they can be useful for businesses of all kinds. Sometimes, they are organized by community development groups or universities, and often the incubators are run by private companies and investment groups. There are two major ways the incubators operate in. In some cases, they offer resources such as offices, computer equipment and expert consultation in exchange for a percentage of the revenue. In others, the incubators provide a business with cash as well.
The simplest way to get funding without any meddling in how you run your business is to apply for a business loan. Financial institutions such as NSW Mortgage Corp can accommodate the needs of most businesses, meaning that the loan could be only a short-term solution. For smaller businesses, you could also use a personal loan to fund the initial expenses. Before applying for one, it’s important to have a good credit score and a comprehensive business plan outlining the future of your business, especially including all the revenue you’re expecting to make.
Crowdfunding campaigns are a relatively new phenomenon, but they have managed to fund a lot of successful projects and businesses. People pledge money to a project you’ve described online and in return, they get an early access to your products or small rewards (like autographed books or T-shirts). Another way of doing it is by encouraging internet followers to pre-order the products you’re offering while they are still in the production (or even design) phase. It’s an effective way to get funds, but it requires a compelling campaign and significant internet following to really make it.
Small business grants
Governments offers grants for small businesses. This is done on all level of government from municipal to national, and the hoops you need to jump through can vary accordingly. Not all businesses can apply for these grants; the government usually allocates funds only for certain fields – such as new technology, medicine, education, social justice ventures, etc. Grants are usually not refundable and can be of great help for a new business. It’s important to note that the recipients of these grants also need to show proof of potential revenues and not operate strictly according to rules and regulations in their industries.
There’s a long way to go between having an idea for a business and actually launching one. Choose the way you get the funding carefully because that is a long-term commitment that will affect the way you run your business for years.