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Tuesday, October 1, 2013

Creative ways to fund your start-up

Numerous ways of financing new businesses exist
Vendor or supplier credit accounts help new businesses maintain cashflow
By Alex Faubel
 
If there’s one roadblock that haunts entrepreneurs, it’s financing. You have that great idea, you have that strategic plan in place, you have the drive and motivation, the only thing you need is money. 

Luckily, there are plenty of creative solutions to your money woes. With so many resources right at your fingertips, there is no reason to give up on your dreams! In this article, we’ll teach you several creative ways to fund your start-up!

Customer financing


What if you could direct consumers to buy your product before it’s even produced? Believe it or not, this type of financing does exist and has been an avenue of success for many business owners. In essence, the business convinces customers to pre-order their products. For example, Tesla Automotive Company is still in the production phase of its high-end electric vehicles. The funding that they are currently using to build these ultra-chic vehicles comes from high-end customer pre-orders. Basically, the customer buys the vehicle before they even receive it. Once the cars are produced, the customer will then receive their vehicle.

Loans


Perhaps one of the most basic ways to finance your start-up is through the use of loans. Fortunately, there are government supported initiatives that allow entrepreneurs the chance to start their own business. Known as the Small Business Administration (SBA) loan, this federally-backed incentive program offers loans to businesses, not individuals. To find a lender, check with your local banks and inquire about an SBA loan.

Selling your capital


As you venture out and start your business, you will find out just how many sacrifices you must make. One of those sacrifices may entail selling some of your personal assets. Do you currently drive a 20 thousand dollar car? Perhaps you can sell it and get by on a cheaper vehicle. Do you currently own a home when you could be living in a cheaper apartment? How about selling some of that expensive jewelry you never wear? Sometimes, sacrifices like this make all the difference. In the end, you’re better off with the least amount of debt possible.

Crowd funding


Let’s face it, convincing investors to believe in your product and business can be a difficult process. Not only is it time consuming and stressful, but the return rates can be astronomical! That’s why there’s an alternative option: crowd funding. Sometimes known as crowd sourcing, this type of deal involves gathering small investments from numerous investors. These investors want a return on their money without risking too much. The business owner benefits because they end up with the funding they need to get their start-up going. It’s a rather simple process and you can receive funding quickly. To explore the crowd funding option, check out some popular websites such as Indiegogo or Kickstarter.

Friends and family


The importance of a support system cannot be stressed enough when you’re an entrepreneur. The ups and downs of starting a new business will mean that you may need some help along the way. You may be amazed at just how much help you can receive if you only ask. Even if all you can do is secure a loan, the interest rate is bound to be much lower than those of banks. Never overlook an opportunity when you see one!

Do keep in mind that what may work for one person, may not work for you. If you’ve tried the customer financing route and it doesn’t work out, don’t get discouraged and beat yourself over it. Instead, try asking crowdfunding. Or better yet, try and adjust your monthly living expenses so you can have more expendable income. Do keep in mind that the mark of success is determination; it is never quitting, never giving up. 


About the author: Alex Faubel enjoys writing about topics related to business and technology in career-focused education programs.

* Image license: Zela; RGBStock royalty free