When you’ve got an excellent idea for a startup, you need a good plan to ensure its success. Unfortunately, a lot of startups fail due to lack of funding.
In order to make sure your startup doesn’t fall into this group, you need some smart and proven ways to get it funded.
Here are some smart tips for securing money for your startup…
Seek Easy Sources of Funding First
First, do you have any savings? You don’t have to drain your bank account, but if you can draw even a little bit from savings, it can prove a worthy investment. Naturally, the more you fund yourself, the more control and equity you retain. At the very least, be aware of what resources you have available and what you’re willing to sacrifice.
Next, look to family and friends who you find reliable. Putting a campaign through your social media to reach them can be beneficial too. They can then share this with other people they know, expanding your reach and helping you find good partners.
You can also reach out to business contacts that you’ve networked with; see if they can direct you to others who will likewise be willing to help fund your startup.
This smart funding tip nearly goes without saying. Crowdfunding has proven very successful for many startups, so you’d be remiss to not consider it. To start, you need to make a reasonable goal for funding. Again, use your family and friends to help you spread the word.
Use crowdfunding sites like Indiegogo you can actually sell products to gauge market interest. The success of your campaign can be used to pull in investors down the road.
Alternative Lending Sources
Another smart way to fund your startup is alternative lending. There are plenty of sites that facilitate peer to peer lending, but you’ll still have to pay it back like any other loan.
However, the advantage is that peer-to-peer lending can be more forgiving, offering lower interest rates than traditional bank loans. If you have to get a loan, this might be a smarter, more flexible option.
Consider a Partner
Turning your startup into a partnership can come with some compromises. Often though, these aren’t deal breakers and there can be more benefits than not. First, a partnership means you’re at least splitting costs. When you’re just beginning, this can prove very valuable.
Naturally, a partner can provide all kinds of other value as well. They may have complementary skills, or have experience that you lack. A good partner will make your startup more attractive to potential investors. They will widen your base of exposure as well.
Smart Funding Isn’t Only About Bringing in Money
Smart funding is also about spending what you have wisely. If you’re looking for funding from a loan, you’ll need a business plan. To raise your chances, you need to show that you plan on spending it wisely.
First of all, use all the free or cheap resources available to you. For printing and flyers, libraries often allow you to print either for free or for very little. Local small business associations are a gift for startups too.
You can get great tips, spread the news about your startup, and do some networking (often for free). Another fantastic tip is to use social media to promote. A good rule of thumb is that whenever you think of spending precious funding on something, look for a free version first or seek out less expensive alternatives.
Here’s an example:
You want to send in documents to apply for a grant to fund your startup. Rather than invest in a fax machine or go to your local copy shot, you can get a monthly internet fax subscription instead.
Always make sure to manage your finances and spend wisely.
Consider an Angel Investor
Angel investors can be just what you need, as they are often wise to the process of startups and businesses. They can provide you with the funding you need, although often in exchange for a stake in the business.
The other benefit is that they’re often very business savvy and provide you with plenty of advice along the way. Look for a list of accredited and trustworthy angel investors if you want to pursue this funding option, but know that you will need a very impressive pitch to secure an investment.
Funding You Don’t Have to Pay Back
There are all kinds of grants that are available to new and existing businesses. It’s worth the time and effort to research and apply for them.
Unlike other forms of funding, grants are free money. You don’t have to pay it back, much less with interest. But it requires work. You’ll likely have to write a proposal and meet other qualifications.
Summing up Ways to Fund your Startup
Startups are gaining a special place in today’s culture. It’s easier than ever for someone with a good idea to secure funding and bring their product to fruition. By making use of smart funding options and maximizing your outreach, you can make it happen.