If you have little capital and a good project, do not despair, there are ways to get financing for your company, and in this article, we will explain how to finance your project.
These are the five best way to get funding for a small business.
1. The different funding resources:
- Savings: An entrepreneur who needs money to invest must start by looking at their own personal resources. If you do not trust your idea, how will others trust you?
- Family, Friends, and Fools: those who know you better and someone very reliable can give you a good part of the money you need.
- Crowdfunding: The Internet allows you to finance your project thanks to a large number of small contributions on specific platforms.
- Bank credit: there is not much availability of credit, but banks continue to lend to promising projects. You can also count on ICO lines.
- Venture Capital: so-called Business Angels and Venture capital companies have been much less affected by the crisis than banks, are an excellent resource for reliable and very professional projects.
And do not forget that to ask them to invest in your project, it is essential to have a business plan ready.
2. Start when you already have a client:
Why put to spend money on rents, tools, salaries and services when you have not yet got a customer? If you had clear your project and prepared your business plan, you can go looking for clients before formally setting up the company. This way, you can use your first sales to take part in the initial investment.
3. Look for alternative solutions to the investment:
Renting can come out more expensive than buying, but it has a big advantage: you do not have to invest and do not need financing: you are paying month to month while using the object of the rent. If things go wrong, or if you no longer need this tool, stop borrowing it and stop having an expense.
What seems obvious for a local (few new businesses start spending $ 300,000 to buy a real estate asset), should also be considered for any investment of significant value (tools, technology, furniture, transport elements). Apparently, it must be ensured in each case that rent is a viable option, that prices are acceptable and contract duration commitments do not bind us for more than desirable.
Although we pay more than we would be paying off and paying interest, it has the immense advantage of allowing us to prove our concept. If it works, with proven results it will be much easier to get the financing that will enable us to buy and let the rentals.
Also read: Funding a Business: How to Get Startup Money
4. Charge everything in cash
Apparently, if we need funding for our project, leaving a payment deadline to our clients forces us to ask for more money to finance the others. That’s not counting the risk of unpaid bills. That is why it is very advisable to work in cash, although in some sectors is not so easy. Remember that there is only one thing worse than not having a customer, and it is working and invoicing and then not charging.
5. Look for cheaper alternatives
At first, you are tempted to buy only new materials and tools, however, in many cases, there are second-hand equipment, much cheaper and can serve us correctly. For example, if we are going to build a restaurant, we may want to buy new furniture (tables, chairs, etc.), but inside the kitchen, we could install the equipment of another restaurant in good condition but second hand. In times of crisis and unfortunately with many bankruptcies in all sectors, there are opportunities to take advantage of.
We hope these tips will be useful to future entrepreneurs.
Recommended reading list:
- 10 Financial Tips for Startup Entrepreneurs
- 5 Financial Mistakes Small Businesses Make
- 8 Steps To Getting A Business Loan For Startup
- How To Create a Business Plan in Just 2 Minutes
- How to Quit Your Job and Start Your Business in 90 Days
- Choosing the right place before financing your project