If you want to start a business, you’re going to need some cash. Here are seven different types of funding you can use to create your startup.
69% of entrepreneurs start their businesses at home, which saves on expenses, but you still need money.
Bootstrapping your business can be challenging and put unnecessary strain on your business, and it doesn’t have to be that way. There are different types of funding you can secure as you’re working to make your vision come to fruition.
Continue reading this article to learn about different ways to get the cash you need to keep your business booming.
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Get a Bank Loan
One of the more widely known means of securing money for a business is getting a bank loan. When you look at sites like YourFundingTree.com, you’ll see there are many different types of loans, so understand what type of loan the bank offers is key.
When you’re talking to the lender at the bank, don’t be afraid to ask about terms and get clarification on anything you don’t understand.
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Credit Cards
When you’re desperate to get your startup off the ground, you might be out of options. While using credit cards isn’t the ideal way to get what you need to run your business, they are a viable option.
If you only need the loan short-term, it wouldn’t hurt to use your credit cards. If you need a long-term loan, you could end up paying thousands of dollars more than what you originally borrowed by using this option.
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Bet Your Retirement
You’ve been working to build your retirement nest egg, but that doesn’t mean you have to keep it for when you’re old and gray. Many successful business people have bet their retirement for a return that would impact their entire future.
While there are penalties for taking your money out early in almost every case, you can take your money out of your retirement accounts and use it toward your business.
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Say Hello to Crowdfunding
People love getting involved in causes and projects they care about, and now crowdfunding makes that easy. You don’t have to keep track of who gave you what and repay the money, either.
You can use sites like Kickstarter to set the terms of the crowdfunding situation and get the word out to people about what you’re doing. If your project isn’t super costly, this is a good option to get the money that you need rather quickly if you’re doing something people believe in.
While there are people that have raised millions of dollars through crowdfunding, don’t get discouraged if people don’t quite see the vision yet.
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Venture Capitalists
Venture capitalists, or VCs, are a good way to get money for your project quickly. There are many VC firms that will invest in promising young businesses for a percentage of equity in the business.
When you choose to go with VCs, you are going to be giving away a portion of your business. If you’re going to get emotional about your business, you might not want to go with this option.
Keep in mind that if you partner with the right VCs, they may use their other resources to help you as you’re growing your business. Since they have a stake in the business, they want it to succeed, and they likely have some connections that could help you.
Make sure you choose VCs that align with your values, so there isn’t conflict when you go to make major decisions in the business.
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Personal Savings
You’ve got a nice savings account, but you haven’t touched it yet. While it might be a little scary to live life without a savings account, what are you waiting for?
If you think this business idea is going to be the one to change everything — how much do you believe that? Using personal savings does mean going all-in on the idea and might be exactly what you need to get your head in the game and pull off the project.
When you do decide to use your personal savings to fund your startup, you should still keep an emergency fund in case something goes wrong and you need cash right away.
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Find a Strategic Partner
If you’re trying to pull off a big idea on your own, it is possible, but it might be helpful to find a strategic partner. When you have someone that complements your strengths and helps in the areas of your weaknesses, you’ll find your business will develop much faster.
If you look at many of the top businesses today, you’ll see most of them have partners.
Not only are two heads better than one, but strategic partners also have access to money, which can be helpful when trying to boost your business. Business partners reduce your liability in the business, and you’ll be able to have less to take the fall for if something does go wrong in the financial department.
Now You Understand Different Types of Funding
Now you know more about different types of funding and can avoid running out of money to keep your business going. You may need to combine a few different funding options as you’re getting your business into the green, so knowing your options is a must.
Do you feel like you need to learn more about business and finance? Our site is full of articles that can help you as you’re boosting your business to the next level.
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