It’s time to turn your million-dollar idea into a reality. All that’s missing is one important piece of the puzzle: figuring out how to finance it. If you’re considering starting your own business but don’t know how to secure funding, keep reading. There are plenty of options to help you get your business off the ground.
If you’re ready to become your own boss, check out these five tips for financing your own business.
1 Have a (Business) Plan
This is our first tip for a reason—having a thorough business plan is the only way to get an accurate idea of how much money you’re going to need to launch your dream company.
From how many employees you’re going to hire to how broad your marketing strategy will be, your business plan should include all the nitty-gritty details. Your plan should also factor in possible expansion and long-term growth goals.
2 Always Overestimate
Now that you have a detailed business plan laid out, you should have a rough idea of how much money you’re going to need. We recommend adding a healthy financial buffer to your final number because—let’s face it—you’re almost always going to need more money than you think.
Unexpected expenses are often lurking in the shadows, so having extra money in your budget can help you sleep better at night.
3 Consider Crowdsourcing
Teamwork makes the dream work, as the saying goes.
This concept can be applied to your business, too, so consider capitalizing on the benefits of crowdsourcing. Not only will this approach help you raise the funds you need, but it will also spread the word about your business!
Most crowdsourcing campaigns fall into two major categories:
- Rewards-based crowdsourcing – This strategy incentivizes people to donate funds by offering donation-based rewards—$10 for a T-shirt, $20 for a meal prep kit, $100 for a full-service house cleaning voucher. Usually, these goods and services are related to your business offerings, but you have some creative freedom in this regard.
- Equity-based crowdsourcing – This is an easy way to turn interested investors into shareholders in your company. They’ll receive stock in your company based on their financial contribution.
4 Look into Loan Options
Leading an entrepreneurial lifestyle is great, but a history of self-employment may limit your success when applying for traditional loans.
It’s too early to get discouraged when there are other ways of securing a loan.
Just because you don’t have W-2 forms or letters of employment to prove your income doesn’t mean there you can’t take advantage of certain loan options. We recommend looking into stated income loans for self employed borrowers. These non-traditional types of loans use your recent bank account deposits as proof of income with no tax transcripts or returns required.
5 Your Business Needs a Budget
When taking out a loan or raising funds through a crowdsourcing campaign, it’s easy to startviewing these options as proverbial blank checks. Money in the bank is good, but it won’t sustain you forever.
Sometimes, it helps to take a step back and remember that the less money you use to start your business, the sooner you’ll see a return on your investment. Plus, you never know what the stock market or national economy will look like in the future.
Limiting your spending is tough when it’s your job to impose these checks and balances on yourself. A good starting point is to determine your variable costs and how you can keep them low. These costs include:
- Office space rent
- Professional development
You Have All the Tools You Need
It’s official: you’re ready to let your million-dollar idea start making you millions (a little optimism never hurt anybody, right?).
Consider all your financing options to ensure you don’t miss out on funding opportunities or overlook an important step in the process. Kudos to you for doing your research! We can’t wait to watch this exciting journey unfold.