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These Are the Different Ways to Fund a Business

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These Are the Different Ways to Fund a Business

Of the many challenges that an aspiring entrepreneur has, finding a way to fund a business seems to be at the top of the list. The lack of funds is what holds us back from pursuing our entrepreneurial endeavors.

So how do you fund a business? How do you make sure you raise enough capital to get the ball rolling?

This short guide will tell you all you need to know about funding a startup.

If you want to start a business, you have to first start with crowdfunding:

1. Crowdfunding

Many great businesses and projects have been launched due to crowdfunding. It’s also a great way to help existing businesses, particularly during tough times.

With crowdfunding, you share the details of what your business will do and what its mission is. To succeed at crowdfunding, you want to look at previous successes as a precedent for your own campaign.

For example, consider the classic story of Cards Against HumanityThis business was launched by sharing the idea of a unique card game. The campaign shared a prototype of the game and what it would look like. Incentives, such as getting the game for free, were given to donors.

You want to emphasize the value of your company and offer great incentives to potential donors.

2. Investors

If you wish to go the traditional route, you have to look at investors. For most startups, an angel investor will suffice. If you have an ambitious project, you’ll want to look at a venture capital firm.

An angel investor offers a small investment in a startup. These investments are usually under $1 Million, sometimes going as low as $1,000. If you do have some funds for your business, but need an extra “few” dollars then this is a great option. Angel investors are also willing to invest in simpler businesses that are easier to run.

A venture capitalist has more stringent requirements. You will need to prepare a business proposal to present to the venture capitalist. Expect to go through several rounds of interviews and meetings before getting approved.

You should find a great consultant to help you get in touch with investors, such as CCSADVISOR

3. Sell Shares

You can offer shares of your company without going public. Your friends and family are often your best support system. But like crowd funders, they will want something in return for funding your business.

You can offer shares of your business to your friends/family who provide you with funds. You can offer a tier system, where you give a percentage of your company’s ownership depending on how much of a donation is given.

You want to make sure that the total ownership remains under 50% so that you still are in charge of company decisions. If your friends/family have taken an interest in your entrepreneurial dreams, reach out to them for business funds.

Now You Know How to Fund a Business

These are the 3 best ways to fund a business. You should start with either selling shares or crowdfunding for your business. If you find you need more funds to take your startup to the next level, consider an angel investor or venture capitalist.

Make sure to share this with your fellow entrepreneurs. You can also find more great business tips on our website.

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