As an entrepreneur, turning your business idea into a reality can require a great deal of time and effort. Whether you find it necessary to hire new employees, develop new products, or expand your workspace, acquiring the funding to get your business off of the ground is not always a sole effort. Thoughtful planning can set you and your business up for long-term success.
1) Have a Solid Business Plan
What separates your business from the rest? This is something you will have to ask yourself frequently as an entrepreneur, particularly when seeking funding. If you are able to clearly outline your short- and long-term business strategy, including business incorporation and marketing, you will provide potential lenders and investors with the confidence they need to financially back your startup. Having a foolproof business plan will make it easier to avoid misallocation of funds and will also come in handy when budgeting.
2) Network to Find Investors
Playing an active role in local business organizations and attending business networking events can help you build a strong base of business connections. It is also beneficial to have other small business owners to turn to for guidance in reaching your entrepreneurial goals.
This does not mean you should solicit every new business contact for funding; Rather, build lasting relationships with fellow businesspeople and community members to expand your network. If you have a strong presence in local happenings, potential investors may be more likely to take your business endeavor into consideration.
3) Loans, Lenders, and Grants
When seeking capital for your business enterprise, carefully research the options available to you. Because every business idea is different, there is no cut-and-dry solution to acquiring capital for a startup.
One common route for raising business capital is to secure a loan from a bank or credit union. Since loan terms vary and require a great deal of commitment, small business owners should not seek a loan before having a strong business plan. Business credit cards are an option for smaller-scale lending.
Many entrepreneurs are surprised to learn that federal grants exist for the purpose of stimulating the economy and bringing savvy ideas to life (www.grants.gov). If you believe your idea may be eligible for a federal grant, it may be a worthwhile avenue to explore.
4) Consider Crowdfunding
For many small businesses, particularly sole proprietorships, it may be difficult to find investors or secure loans. Crowdfunding platforms create a broader audience for your business pitch. Thus, crowdfunding could help you generate interest and pinpoint a specific audience that may find your product or service useful.
There are a variety of options when it comes to crowdfunding. Some crowdfunding platforms reward investors with company stock or shares (known as equity crowdfunding), while on other platforms, members fund a business venture for the opportunity to buy or pre-order a product.
5) Budget Wisely
Past the preliminary costs of incorporating your business and setting up the business operation, where will you allocate funding? The way you choose to distribute funds can vary greatly, depending on your specific type of business and business plan. Management, growth, marketing, and taxes are only some of the assorted costs to consider.
Professionals strongly advise new entrepreneurs to get into the habit of keeping business expenses from personal expenses as separate as possible. Having an organized and thorough record of expenses is key to the financial health of your business. If budgeting is not your forte, do not be afraid to seek help from a qualified, trustworthy source.