When starting a small business, some people try to dump their own money in the business to get it going. While financing a business on your own is easy and effective, most people don’t have the disposable income to be able to finance independently. Some people simply give up when they realize they could never afford to finance the business on their own. If you have a desire and vision to start your own business, but you don’t know how to go about financing it, make sure you know these unique ways to finance your small business.
Microloans are a great way to fund your small business. Microloans are small loans that you can obtain from non-profit and private companies. While the interest rate might wind up being higher than a traditional loan, the interest is usually less than if you were to use credit cards to fund your business. Small startup businesses are less likely to be approved for regular loans because they have no history showing how much of a return they’re going to receive, and most of them don’t need to borrow as much as traditional loans require.
Microloans allow potential business owners to borrow up to $35,000. Some of the organizations that offer microloans give you simple ways to pay it back without hurting your revenue. For example, you might be able to pay back microloans by only paying a certain percentage of credit purchases. Of course, if your business is solely online, this will include all of your sales.
If you want to apply for a microloan, you need to write up a detailed business proposal. It’s important to use your best efforts and take your time with your applications. It’s not something that should be written up in a day. You need to include all of the specifics about creating your business. It should be just as, or even more detailed.
Crowdfunding is a common way to finance small businesses in the 21st century. Crowdfunding is kind of like social media for small businesses. Crowdfunding is a way to get your business funded by receiving money from other like-minded individuals. With crowdfunding, you create a profile on the crowdfunding site, included with details about the business you want to start. People can read different business plans and donate money to people that they want to see succeed.
When you create the donation information, you can choose different amounts that people donate, along with gifts they will receive for donating the given amount. Gifts often including receiving the item(s) the business will sell at a discount or for free when they become available. You can choose different incentives to give to people depending on the amount that they donate. For a couple dollars, you might give them a coupon code to order a product online that exceeds the amount they donated. For a large donation, you might offer a variety of free products or several coupon codes for free products.
Crowdfunding isn’t a simple way to raise money for your business. You need to have a solid, well-thought-out business plan. If you think of a business that seems like a good idea and you type up a quick plan and post it in the same day, people are going to notice the thoughtless write-up. If the plan seems lazy and lacks information, people aren’t going to be likely to donate. They will assume that you didn’t put much thought into it, and the business venture is more likely to fail. You need to include as many details as you can about how to plan to create the business, what can go wrong, and how you will overcome specific obstacles.
One simple and often overlooked way to fund your business is through product presales. Of course, this isn’t something you can do if the products aren’t even close to being designed. However, it’s the perfect way to receive funding if you just need money to create the products. If you jump the gun and do it before the business is even running, too much can go wrong. People who get impatient might wind up canceling their preorders and not trusting your business. These days, you need to be aware of angry bloggers. A wrong move can be announced quickly through a blog and wind up trending the internet.
If you need to raise money for your small startup business, try one or more of these ideas. If you put thought and effort into it, you should raise the money you need in no time.