If you’ve just started a new company of your own and are beginning to feel the sting from a lack of funds, there are all sorts of things you can do to get through the monetary dry spell. In fact, it’s quite common for entrepreneurs to sweat it out over funding for any new business venture. Some of the lucky ones already have angel investors on board or are armed with ample personal resources to pay for the costly upfront expenses.
For the huge majority of new owners, however, there’s a need to dig deep in order to find the necessary dollars and get off square one. After clearing that hurdle, you’ll be ready to put all your ideas into practice, build a client base and finally earn a profit. Don’t be discouraged if you’re unable to secure small business loans or use factoring in the early life of your entity as it takes patience. For most newly minted CEOs, at least a few of the following tactics will be enough to get those first dollars rolling in no time.
Work Your Network
It might sound like a broken record, but if you leverage the contacts you already have, you can get a step ahead when it comes to financing your new business venture. Many wonderful books have been written on the subject, but the essence of what they advise is to use lists, email addresses, phone numbers, and snail-mail addresses of friends, relatives, acquaintances, co-workers, classmates and old school pals to get your master contact list started.
From there, go through all the data and eliminate information that is no longer useful, like outdated phone numbers and lapses email addresses. Try a test contact with each of the names remaining to see if people respond. In the test message, you will want to include just one or two sentences about your venture and the fact that you are searching for backers. Try to avoid using the word investors. For some reason, the term doesn’t work well but describing as backers can. From there, constantly add to your network as you get responses from people, think of additional names and acquire new leads from any search methods you use, like purchasing lists of email addresses.
If you already have a few clients and some regular cash flow, you can factor your income. That’s an arrangement where you sell a stake of your future income to a person called a factor. A common setup is for a factor to be connected with a financial institution and to offer you a fixed amount of money upfront in exchange for a percentage of your income flow. You make the payments each month based on that month’s income and continue doing so until the entire loan is paid off. For some entrepreneurs, factoring is a low-interest, simple way to borrow money. In a sense, you’re using your future income stream, based on past results, as an asset to secure this type of loan.
Refinance Student Loans
One of the fastest, most efficient ways to free up money from your regular monthly budget is to refinance any student debt you currently have. A refinance agreement from this site here lets you do essential things such as you being able to enjoy a lower interest rate on the debt, you get a longer time to pay back the student loan, and you instantly lower your monthly payments. Those lower payments translate into extra cash you can use for your startup or anything else you need the money for. A refinanced education loan is one of the most common ways for new owners to access some quick cash without having to borrow additional money, knock on doors or sell assets.
Get a Bank or SBA Loan
Small Business Administration loans can be a bit of a challenge, but plenty of potential entrepreneurs get them every year. You’ll need to be ready to provide detailed financial statements, have pretty good credit and show the SBA your business plan as well. Bank loans, if you have good enough credit to get one, are usually pricier, in terms of interest, for borrowers, but represent a solid resource for entrepreneurs who are willing to jump through a few hoops to obtain the funding they need.
One of the newer financing methods, crowdfunding can work very well or not so well, depending on how you approach it. If you prepare a list of contacts and are willing to spend a modest amount on advertising, you can turn an idea into a fully-financed project in a matter of months. Be sure to check out the half-dozen or so top crowdfunding sites to see which one suits your needs the best. Some specialize in certain types of projects, like books, healthcare or films.
Once you locate a platform that looks like it will be a good fit, build a web page on the site, write a short summary of what you’re doing and why you need financing, and you’re all but done. The final step is to activate the project and follow up on any responses you receive. Often, the hardest part of crowdfunding can be the follow-up, so be certain that you use the funds for your business idea and nothing else. Let each backer know that you appreciate their support and keep that list of names. In the future, you might find that many of those people are your most loyal customers.
If you don’t need a huge sum of money to get your entity off the ground, consider using whatever credit you already have available on plastic. Be careful to only reach for the cards as a last resort because you’ll be paying a higher rate of interest on credit cards than any other option you choose. But if you really believe you’ll be able to pay the money back in a relatively short amount of time, financing with credit cards can be the simplest, if not the cheapest, way to get your operation started.