For many, the thought of starting a business is enough to keep them up at night. Others, however, look at this idea and wonder if they have what it takes to pull it off.
There are many challenges of starting a business, but one stands out in the crowd: finding enough money to get up and running.
You can have the best idea in the world. You can have a solid business plan that will put you on the right track from day one. But if you don’t have the money to turn your vision into reality, it will be difficult to make any real progress.
Where to Look for Money
There are many places to turn for money, with the following ideas among the most common:
- Personal savings
- Family and friends
- Local bank
In a perfect world, you will have enough of your own money to fund your startup and startup payroll if you’re hiring employees. This means you won’t have to take on debt or rely on anybody else to supply you with the cash.
But the world isn’t perfect. For this reason, you may need to reach out to others, such as a family member or bank, to secure the appropriate amount of money.
Alternative lenders have also recently come in to prominence. These online lenders make it easier for small business owners and entrepreneurs to get money quickly than a bank, but often at higher rates. Small business owners reported in 2014 that 36% of them would use an alternative lender, compared to just 13% the year before.
Another Idea to Consider
While the above options are extremely common, here is another idea to consider (shared by The Wall Street Journal): finance your company with your customers’ cash.
In short, you aren’t putting out your own money upfront. Instead, you find a way for your customers to finance your business.
This is an excellent idea for service-based businesses that can employ a pay-in-advance model. Are you interested in opening a web design firm? If so, you can request clients to make a deposit before you start their project. With this money, you can cover some or all of your costs as you complete the job.
Note: this strategy works well for service-based businesses, but not so much for brick and mortar stores or those that require a lot of equipment.
The truth of the matter is that you can find many excuses for not starting your own business. Don’t let money stand in your way. Instead, consider the options above for securing the necessary funding.