One false assumption that outsiders have about the business world is that a great business idea is like a money magnet. In other words, as soon as you come up with something new, you simply can’t fend off all the investors and people who are swarming to you in order to give you the money you need to get started. Sadly, this is as far from the truth as it gets. Having a great idea is useless without knowing how to write a business plan and more importantly, how to present it to the public. Moreover, you need to look for all the money-gathering alternatives out there and try your best to figure out which suits your business the most. With this in mind, here are five ideas you should look into.
Find a partner
The first thing you want to do when deciding to look for some additional business funds is find a partner. First of all, it helps you avoid falling into a problem of becoming a sole proprietor. In this way, you can protect your personal assets from a potential failure of your business. Second, it not only improves your financial situation, but also helps ease off a part of the burden regarding administrative tasks. However, it is important that you understand that finding someone with same interests is not necessarily the same as finding someone who shares your vision.
Sell equity in your company
Of course, you’re in no way compelled to sell equity in your company to a single person, when you can gather more than a few shareholders. In this way, you can acquire a substantial amount. However, you are doing so at the expense of the control of your company. For this reason alone, it is vital that you make a formal contract with all parties that are participating in this deal and have them sign shareholders’ agreements. Needless to say, this is not a 100%guarantee that everyone will stick to what’s agreed. However, it gives you legal precedent to swiftly and effectively solve future disputes.
Look for a loan
Perhaps the most traditional method of providing funds for your business is looking for a loan. Here, you get to maintain full control over your business (unlike with looking for a partner or selling equity), however, you might be forced to submit a collateral. On the other hand, in the era of credit union platforms and independent lenders on the internet, you can also look for fast business loans online. This is a preferable option to banks due to the fact that it can help you avoid most of the paperwork that would otherwise pose an arduous task.
Nowadays, most tech companies and app developers prefer to go with crowdfunding. In this way, you need to find a compelling way to present your vision and look for people who are willing to invest in order to make it happen. The problem here is that there is a lot of chance involved, as well as the fact that your presentation skills often come off as more important than the actual idea. Nonetheless, where some see an obstacle, others see an opportunity. This is exactly why some legit business ideas failed, while jokes like the potato salad guy from Kickstarter managed to amass fortunes, for reaching out to the right crowd at the right moment.
Sell an asset
Finally, one of the simplest and most efficient ways to acquire funds for your startup is to sell an asset that you own. The greatest benefit of this is that there are no strings attached. You get the money without the need to pay it back, without interest rates, without partners and of course, without having to rely on luck, chance or presentation skills. The downside of this is, however, that not everyone has an asset to sell. Moreover, selling a car or a home might result in ROI that will help you buy them back. However, there is no guarantee that this will be the case. In the end, you might get the result similar to the worst-case scenario of running a sole proprietorship.
As you can see, each of these methods has some advantages and some disadvantages. Therefore, your personal preferences and the amount of money you need might be the key factors in deciding which of them you should pursue. For instance, while taking a loan might be the most convenient option, some people are so intimidated by the very idea of interest rates that they decide to go with something else. Still, it is more than vital to approach this topic as rationally as possible.