As a young entrepreneur you probably don’t have a strong business background and maybe this is your first time trying to start a business. In this situation, it might seem impossible to get the funding, but today there are Five Easy Ways Young Entrepreneurs can finance their Business Ideas.
Nonetheless, you need to be very careful and you need to know everything there is to know about small business, especially when and how they fail.
For this might happen. And it’s not such a big deal — it happens to everyone. But it turns out into a big deal if the person who invested is not you.
That’s why you should be very careful with the approach you take when it comes to loans. In this story, I won’t even discuss mortgage because it’s the last option and I think there are easiest ways to consider before making that step.
1. The Traditional Way
Tradition is nothing more than following the footsteps of others and playing by the rules. This is pretty obvious from the fact that today still three-fourths of new firms seek to finance through a bank or a traditional lender.
Of course, this doesn’t mean there’s something wrong with this option — it’s just a most frequent one and at the end of the day you’re the one who will decide if it works for you.
Just keep in mind that if you plan to get your funding from credit cards and business loans, you’re gonna need a top-notch business plan. It might seem silly to say this since it’s understandable that you’ll need a good business plan in order to search for funding, but for filling out a loan application in a bank you need to have every detail of your business planned, especially its growth in the future.
2. Go Online
In this modern times, everything can be found online, even investments.The same way the shopping is easier via clicks from a comfortable chair, the funding is easier because there are no restrictive eligibility criteria that can be often found among traditional lenders.
In a real world you’ll maybe not be able to qualify, but in a virtual one you’re ready to go. So, get ready Player One!
Although I’m joking a bit there is some truth in this and you should definitely consider online lenders.
The world of online finding also has its own rules, but advantages are pretty obvious — the waiting time is increased to a minimum and the eligibility criteria is far less strict.
Of course, the vast Internet space also hides many personal offers that can be quite tempting. They can seem (and sometimes be) a pretty good alternative since they don’t require the collateral.
But don’t get carried away too easily — always calculate additional cost that comes with the loan and the interest rates so you’re sure you’ll be able to repay.
3. Present It to The Crowd
Although we can say this is a part of the Internet solution, this type of funding has nothing to do with programs nor machines.
It’s the same as standing in the middle of the square and advertise your business by shouting out loud, but we’ve become a little bit more civilized by now, haven’t we?
Jokes aside, crowdfunding is increasingly popular, but by far the youngest financing strategy.It can be very efficient which can easily be proven by the number of successful Kickstarter of young entrepreneurs. What makes it different from shouting in the middle of the square is that today your main required skill is not the power of persuasion (although it still is important) but how well connected you are.
The point is to make people talk about your business idea in order to bring a strong community around your firm that will bring you the necessary finance.
If the almighty Internet fails you (and this doesn’t happen so often) there is always one more sanctuary you can turn to — Your Family.
I believe that it’s the last option in your mind. Since you’re your own man now, but you’ll be surprised to realize that this is actually a very common way of financing.
And why wouldn’t it be? They are your parents (brothers, sisters, maybe even friends who are ‘like a part of the family’) so it goes without saying that you won’t be paying any additional fees or interest.
There won’t be as much money as there would be through the business loan (unless you come from a family of Rockefellers, but then you wouldn’t go around searching for a loan, would you?) but it can be a good start.
The much bigger problem lies in the fact that Mommy knows you better than anyone in the world, so you may end up going through an even more rigorous assessment process than using traditional channels.
5. Angel investor
Make deals with your family you can always look up at the sky and try to find your guardian angel. Or, in this case, guardian investor. This one is not a joke, actually.
The angel investor is a person who is a former entrepreneur or professional that can provide a growth capital to up and coming ventures. It’s his contribution so there are usually no tricks behind this gesture.
They operate alone so their financial resources may be limited, but there’s a pretty good chance he has more to offer than your mom and dad.
Nonetheless, they do have their own evaluation process — it might not be so rigid, but keep in mind that they’ve been in your shoes and know how it works.
The very fact that you could be standing before your guardian angel suggests that you should carefully plan your approach.
As you can see, there are a lot of ways you can finance your business idea and, as I said, it’s up to you to figure out which one is best for the nature of your business.