Running your own business is a great way to generate wealth. In times of economic uncertainty, you just can't rely on a monthly paycheck to keep yourself financially stable. You need another source of income that's sustainable, making a business a great option to consider — that is, if you can structure it well enough.
While it can generate a constant stream of income, a business requires a great deal of time and resources to set up. And when it comes to resources, you should be willing to invest a lot of your own money or consider startup business loans.
Financing is, without a doubt, an essential yet complicated part in planning and establishing a business. It would be easier to win the lottery, but the odds are minuscule. What you need is to look for suitable strategies for gathering the resources you need for your business.
And sure enough, there are a lot of easy and practical ways for you to generate the initial capital for running your business. Startup business loans are not your only avenue; here are other ideas to consider:
- Tap other people's money
Think about the possibility of reaching out to people you know who are more than willing to contribute to the birth of your business. Friends and family members can spare a few extra dollars to help fund your business, but you can also tap people from outside your immediate social circle.
Crowdfunding, for sure, is a great way to gather resources from people who would like to see your plans become a reality. However, this will only work if you have an exciting idea to provide to consumers. Coming up with an innovative and disruptive gadget or app is bound to generate interest, especially if it's focused on solving everyday problems. You have to focus on the value that people will gain when they buy your product.
- Attract VCs and angel investors
Getting ordinary citizens to fund your business project will take time and a great deal of creativity. But if you want access to a large pool of resources, tapping angel investors and venture capital firms are the right way to go.
These entities are wealthy individuals and companies who invest in smaller startup companies who are willing to take on a high level of risk. One way you can access their funds is to build valuable networks with influencers. If your product or service has already gained some measure of success in the market, then you can bet that there will be angel investors who are bold enough to invest. For VCs, you can simply reach out to them personally. To get the money, entrepreneurs need to come up with a compelling pitch.
But while you are guaranteed to get massive amounts of resources for funding your business, angel investors and VCs will typically ask for a stake in your company. They can end up taking over the whole operation. Think it through before you start looking for wealthy investors to finance your business.
Alterative Startup Business Loans
If there is a sense of urgency in building your business, you can check out other options that don't involve the traditional process of applying for a loan. One thing you can do is to get a car title loan.
But how do title loans work? For this, you get quick cash by turning over your car title to a loan provider as collateral. The amount you will be getting is relative to the value of your vehicle. This works well if you want access to cash with little to no risk.
Another option you might want to consider is a line-of-credit where you gain access to a specific amount of cash that you can withdraw anytime you need it. This is particularly useful if you want to have greater control over the money you borrow and ensure that you finance your business for the long-term.
However, as easy as they may be to obtain, many of these alternative loan options can pose significant risks if you're not careful. So, before you ask to borrow money from a provider, conduct due diligence first. Make sure that the provider is legitimate by asking other people who once borrowed from them. You also need to know if these providers have an excellent reputation locally. Also, it's important to keep constant track of the loans you accessed to remain financially stable.
Tap Your Savings
If you have been working hard for some time now, chances are, you may have already accumulated a large amount of money in a savings account.
Notwithstanding the personal cash you have sitting in the bank, there are also other savings options that you can use to finance your business. A 401(k) account is ideal. Not only is it non-taxable, but it can also be used to fund alternative investment vehicles.
This will prove very beneficial if, for instance, you want to establish a startup that specializes in tech products and services. However, using a savings account would make sense if you already have an extensive reservoir of cash lying around. It will take some time, but if you have the right spending habits, you can save enough capital in your 401(k) to finance your dreams.
If you have an innovative solution to share with the world, you can actually pitch your ideas to government research institutions and think-tanks that are keen on partnering with the private sector for specific projects.
This is evident in Canada, where local governments offer significant grants to private enterprises that are developing products and services in the field of science and technology.
You just have to focus on one sector and look at possible problems your business is willing to solve. You can then write grant proposals for certain agencies who will then determine if you are qualified for the money stipulated in the grant.
Final Thought on Startup Business Loans
Nothing is impossible for anyone who has a passion for turning valuable ideas into lucrative business ventures. It's only a matter of knowing where and how to access the resources you need to get the ball rolling. Sure startup business loans are one option, but they might not be the best fit for your business.
Brian is a dad, husband, and an IT professional by trade. A Personal Finance Blogger since 2013 who, with his family, has successfully paid off over $100K worth of consumer debt. I want my three children to handle money better than I ever did at a young age. I have been teaching them as much as I can for the last 10 years. My goal is to continue to champion the financial literacy message and then why I created the “How To Rock Your Money” book. To help teenagers navigate their financial futures. I hope my family’s story of paying off over $100,000 worth of debt will inspire and motivate you to take control of your money. He blogs at BrianBrandow.com