Every career path presents a host of unique advantages and disadvantages, and it all boils down to what suits you best. As much as all professions come with challenges in the beginning, entrepreneurship is a distinct option that offers interesting perks. Whether you’re planning to launch a new brand from scratch or purchase an existing franchise, you will certainly find that small business ownership is both interesting and rewarding.
The Joys of Setting Up a Small Business
It can be difficult to recognize the difference you make or the direct impact of your labors when working for a big company or organization. However, small business ownership lets you understand what you're working for, experience the process of growth, and see for yourself how it all pays off.
When you start a business, you get a great opportunity to build something that means a lot to you. Instead of working for someone else, owning a small business enables you to work hard for yourself or with partners of your choosing. It may be daunting at times, what with tax compliance for businesses, traditional or outsourced accounting, and monthly sales computations, but seeing all your efforts work out can be quite fulfilling.
In addition, you also get to develop a money mindset and make your own rules. Who doesn't want to be in charge of their own company? Although owning a business entails more responsibilities than a regular desk job, being in control of decision-making and how things are carried out is undoubtedly empowering.
Whether you’re convinced to give business ownership a try or feel it in your heart that entrepreneurship has been your calling all along, this short read should help you get started with practical strategies, such as maximizing business loans, for funding your startup.
7 Resourceful Ways to Fund Your Small Business
Crowdfunding is one of the quickest ways to cast a wide net for bringing investors to your startup business. You only need to do your research to choose from several crowdfunding sites. With meticulous planning and preparation, you have a high chance of launching a successful crowdfunding campaign.
You could benefit from crowdfunding in different ways. For one, crowdfunding can help you pre-sell your items and raise funds to be able to go full blast in production, but you may have to spend a lot of the money on incentives to attract people to join. Some crowdfunding services will only give you money if you reach your fundraising goal and may take a cut of your revenues.
It can be challenging to start a company, as it entails putting your money into the business. And it doesn’t help that traditional lenders may be hesitant to lend to beginning entrepreneurs because of the risks that come with it.
As such, many small business owners use funds from their personal savings accounts to cover business expenses and get the company up and running. Here, you must be prepared to do some bootstrapping or stretching your financial resources as far as possible to maintain a positive cash flow.
Angel investors are persons or groups with extra money who are prepared to help a business start or expand. The main advantage of having an angel investor support your business is that it’s quite less risky than taking out a loan or getting venture capital. Angel investors seek a share in your business and are with you for the long term for a sizable return so you don't have to repay the money.
Note that angel investors may evaluate your business plan and that you will need to come up with a strong case as to why they should invest. Angel investors are high-net-worth individuals who invest in startups in exchange for an ownership stake. Therefore, you must ensure your business idea is solid to entice angel investors to sign the dotted line.
Another option is to pursue venture capital for funding. Here, you have to prove that you hold a strong initial interest and a long-term growth roadmap for your business. In general, venture capitalists would invest in companies that have the potential for long-term development. They want to make money on their investments, and many believe that having some control over how the business is run is the best way to accomplish it.
Traditional investment is more difficult to come by for start-up companies with no history, so venture capital is a more accessible choice. Like angel investors, venture capitalists are willing to fund businesses where they can take shares in the company. Venture capital funds are similar to mutual funds in that they pool money from a large number of investors.
If your capacity to pay your expenses is dependent on your ability to sell your goods or services, looking for vendors or suppliers with longer payment terms may benefit you. They typically seek payment on invoices within 30 days before imposing late fees and penalties. Being able to negotiate longer payment terms then allows you to work with more revolving cash.
Microloans are less expensive and more convenient to obtain than regular business loans. They are typically granted by institutions to individuals who would not conventionally qualify for a standard bank loan. Microloan organizations enable individuals to invest in economic opportunities.
Although there are usually particular limits to how much you can borrow, a microloan could be a good alternative if you need a small amount of money to cover specific operational expenditures or initiatives. Microloans are common in small and developing countries.
Friends and family loans
Your loved ones most probably have a genuine personal interest in seeing you thrive. This desire can be a motivation for them to invest in your ventures, especially at the outset. However, accepting funds from friends and family can be precarious, so make sure to weigh all the benefits and pitfalls before deciding to build a budget through this method.
Explore More Options
Whatever funding option you choose, take the time to thoroughly study and determine if all the terms and conditions are compatible with your business plan. The ones listed above are just some of the common options out there, but you can always look for more to suit your specific needs.
Consult with other entrepreneurs or small business owners, as well as other finance sources. You might as well ensure that the decision you make now to help your company doesn't hinder its future.