One of the most daunting roadblocks to starting a business is the often overwhelming lack of funds. Creating a startup is a called a risk for a good reason. But when you’re passionate enough about a project, there is no option but to go forward with it, despite the risks.
Building your company doesn’t have to be risky business if you know how to get enough money to be financially secure. Lucky for you, there isn’t some grandiose secret for how and where to get enough money to start a business. Each business will have different budgeting needs in the beginning, so it’s important that you know what your company needs before you go making unnecessary expenditures.
How to Save Up
The U.S. Small Business Administration has said that most home-based businesses can get started with just $1,000-$5,000 in initial funds. Larger and more main-street startups may require $30,000 or more to get started. Wherever your startup may fall in this range, you’ll need to save quite a bit of money to start funding your business.
As tempting as it is to quit your day job and focus all of your energies on your new business, it may be more beneficial in the long run to stay at your job while starting your business. That source of steady income will be monumental when you’re starting out. However this won’t give you as much time to dedicate towards your business. Consider going part-time at your day job if you can.
Cut Funds Down
Evaluate if some beginning expenses could be forgone. You may get excited about starting your company in a nice office space, but may have to wait until the revenue comes in to afford that. Start in your own home or rent out a smaller, less-expensive office space. Or perhaps you want to hire a large team of full-time employees to do the dirty work for you. When your business is booming you can definitely consider hiring more employees, but can get by with fewer employees and even just a part-time staff in the beginning.
What other expenses may be nice to have, but aren’t really a necessity for starting out?
Build Your Empire Piece by Piece
Great empires and extraordinary companies weren’t built in one day. They started small and built their way to the top piece by piece. You’ll need to do the same, especially if you find yourself low on funds.
Before becoming a fully established business, you can start with a test period where you start building up your audience little by little. This idea is called “bootstrapping,” or starting small with the resources you have and building up from there. For example, you may consider launching your site with just a few products and a blog with sharable content before you offer all your services. See how well this does with your audience and build up revenue before you spend a ton on something that doesn’t gain traction.
Where to Go For Outside Help
When self-funding isn’t enough, you can find plenty of other resources to help get your business off the ground. Here are just a few:
- Crowdfunding: This is huge right now! Even well-established companies are using crowdfunding to fund their projects. If you have built up your company’s audience with a band of loyal followers in your testing period, you will likely have more success with this. But even people who have never heard of your company, but find value in the project you are trying to fund, will often be receptive to crowdfunding.
- Find Investors: Finding the right investors can be a little tricky, but not if you do your research. It now is easier than ever to find venture capitalists and angel investors online. However, you need to put in the time to find which investor would be best for your business. Most venture capitalists won’t fund a small startup unless they know they are going to see the rewards. You will usually have better luck with angel investors, especially when you create a pitch tailored to their interests, values and pursuits.
- Enlist Help From Family and Friends: Often our best angel investors come from those who are closest to us. Unlike venture capitalists, angel investors are more invested in you than necessarily your company. They don’t care so much if they get a profit at the end of it all, but just want to see your business get up off the ground. But because they are family or close friends, you’ll have to be extra careful with how you handle these investments. Treat them like you would any other investor―keep them informed, be accountable to them and be professional, especially if your business isn’t doing as well as you had hoped.
- Apply for a Loan or Grant: The SBA offers a few different loans for beginning startups, but can also help you find state or local loans and grants that may be available to you. Look into meeting with your bank, as well, for possible loans.
Never be afraid to ask for help when funding your business, and never lose confidence in your ability to start your business. So many financial resources are at your fingertips, use them to your advantage.