Turning an or idea into a thriving business is no easy task. The Bureau of Labor Statistics reports that most companies don’t last longer than 15 years, with half of them failing in the first five years. While several factors play in the demise of an organization, finances are often at the top of the list. Entrepreneurs underestimate the cost of starting, operating, and expanding a business, and essentially get in over their heads.
From research and business planning to marketing and operational costs, founders interested in long-term success must invest a lot of time, money, and resources into developing and maintaining their brand. If you’ve been holding off on a new business idea, product launch, or expansion due to limited finances, consider funding solutions such as those listed below.
There’s a common misconception that you need an overwhelming amount of money to start a business. On the contrary, many successful companies were self-funded. Due to modern innovations and affordable platforms, entrepreneurs developed scalable businesses that evolved as sales increased. This concept is referred to as bootstrapping.
Starting a business using nothing more than your savings and efficient financial management methods is challenging, but not impossible. Those interested in taking this path might consider looking for affordable business ideas, creating a budget, finding other income sources, using free and inexpensive platforms, and bartering to get by.
Bootstrapping eliminates the need for entrepreneurs to take out loans, lines of credit, or financing, which puts them in debt. As it can take a while to generate enough sales to cover operational costs, the journey could be long and tedious.
Some ideas require a lot more capital, experience, and resources to become a successful business. If you’ve found yourself in this position, you might consider working with an investor to assist your startup. Investment companies like The Chernin Group (TCG) provide founders with financing, networking, resources, and industry-related advice to develop and expand their brands.
These organizations are always looking for innovative ideas to invest in. Wanting their clients to succeed, they go above and beyond to ensure your startup has everything it needs. Besides providing entrepreneurs with funding, investment firms use their extensive network and resources to take their ideas to the next level. From idea development and research to marketing and operations, multi-level investors will be with you every step of the way.
Entrepreneurs are encouraged, however, to do their due diligence when looking for the right investors. While anyone can give you money, you want to work with someone that believes in your ability to achieve success, has experience in your industry, and has a wealth of resources to invest.
Banks and Private Lenders
A final method for funding your startup is borrowing the money from a bank or private lender. If you’re going to take out a loan to support your business, there are a few things to keep in mind. For instance, new companies will have a hard time getting approved. Lenders use your financial history and credit to determine eligibility, risk level, approval amount, and interest rates. If your business has no record of sales, most lenders will use personal financial history instead.
Those applying for a business or personal loan will need to have a decent credit score, collateral, and a verifiable income source. Essentially, acquiring a loan will require you to minimize your debt to income ratio, improve your credit score, and, in some instances, have a sizeable deposit. While there are loans available for people with bad credit and no collateral, they will cost a lot more in interest.
While half of all businesses fail within the first two years of starting, think of how many success stories never saw the light of day out of fear. If a limited budget has kept you from creating what could be the opportunity of a lifetime, consider the funding solutions listed above. As the saying goes, nothing beats a failure but a try. Who knows? With efficient funding, a great idea, hard work, and dedication, you could go from a hopeful entrepreneur to an accomplished founder.
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