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 Finance e Your Business

There are many ways to get the resources you need to start your business. Angel investor Martin Zwilling, whose company Startup Professionals provides services and products for startups and small businesses, recommends the 10 most reliable ways to fund your business. Explore and evaluate your own resources, circumstances, and life situations to find what works best for you.

• Self-funding your startup Starting your business can take longer, but the good thing is that you are in control of your own destiny (and capital).
• Present your needs to friends and family. Separating business from personal relationships can be difficult, but if you’re considering applying for a loan, here are resources to help you make it as easy as possible.
• Apply for small business grants. First, check out our guide to small business grants. Then visit Grants.gov, a searchable online directory of more than 1,000 federal grant programs. While this can be a lengthy process, it doesn’t cost you anything.
• Start an online crowdfunding campaign. Sometimes strength is in numbers, and a series of small investments can lead to big results. If you think your business is a good fit for something like Kickstarter or Indiegogo, you should read the 10 best funded companies or take a look at the most popular crowdfunding websites.
• Apply to a local angel investor group. Online platforms like Gust and AngelList, as well as local networks, can help you find potential investors related to your industry and interests.
• Attract venture capital investors. VCs are usually looking for big opportunities with teams that have a proven need of a million dollars or more. Therefore, you must have some traction before approaching them.
• Join a startup incubator or accelerator. These companies are designed to help new businesses or startups reach the next level. Most offer free resources, including office space and advice, as well as networking opportunities and presentation events. Some also offer seed financing.
• Negotiate advances from strategic partners or customers. If someone wants your product or service bad enough to pay for it, they likely want it badly enough to be able to fund it. Variations on this theme include an initial license agreement or white labeling.
• Trade participation or initial assistance. For example, you could maintain computer systems for office tenants in exchange for free office space. You may not get paid for it, but you also don’t have to pay for the office, and a penny saved is a penny earned.
• Look for a bank loan or line of credit. Here are 10 questions to ask before applying for a bank loan, including whether you qualify. If you meet the requirements, the Small Business Administration is a good place to start credit opportunities.

Also

Experts generally agree that startups often fail because they run out of money too quickly before turning a profit. It is never a bad idea to overestimate the amount of start-up capital required, as it may take time for a business to generate sustainable income. Also, don’t overspend when starting a business. Understand the types of purchases that make sense for your business and avoid overspending on fancy new devices that won’t help you achieve your business goals.

“Many startups tend to spend money on unnecessary things,” said Jean Paledan, founder and CEO of Rare Form New Media. “We are working with a new company that has two employees but is spending a lot of money on office space for 20 people. They also rent high-end professional printers better suited to teams of 100 people (there’s a key to tracking who printed what and when). Start by spending as little as possible and only on things that are essential to the growth and success of the business. Luxury can come when you settle down.

If you need financial assistance, commercial loans from banks are a good place to start, but these are often difficult to obtain. If you can’t get a bank loan, you can apply for a small business loan from the Small Business Administration (SBA) or an alternative lender.

Startups that need significant seed funding may consider investors. Investors may give millions of dollars or more to a new company, hoping backers will play a direct role in running your business. Alternatively, you can start an equity crowdfunding campaign to raise smaller amounts of money from many backers. Crowdfunding has helped many businesses over the last few years, and there are dozens of powerful crowdfunding platforms designed for different types of businesses. It’s not hard to find good options for your business when you decide to start a crowdfunding campaign.

Learn more about each of these sources of capital and more in our guide to seed funding options.

Learn more on how to start making more and more money.