Financial risk is already in the meaning of the word “entrepreneur.” But this doesn’t mean that you need to sacrifice hand and foot when you decide to take on this label. Unsurprisingly, seeking funds for your startup can be intimidating, especially if it’s your first trip around the block. That said, you need to have the right strategies, a motivational support system, and, of course, money.
To help kick-start your Next Big Idea, here are some of the safest ways to fund your business:
Use your credit score to your advantage
If you’re brave enough to start your own business, then you should also have the discipline to back it up. The credit score you’ve built as a working professional could help you apply for a business loan. Although seemingly straightforward, this comes in many forms, with microloans and SBA loans being the most common.
Pitch to your close, personal network
Even megastar singers need backup dancers to make a stronger impact on stage. In a similar sense, you need all the support you can get to build your credibility and solidify your image to all your stakeholders. Your friends and family are great starting points for this. This is also an effective way for you to practice your pitching skills.
Apply for a government grant
Depending on where you are and what the local guidelines are for state-subsidized grants, the process of applying for one can be tedious. Not only will you have to submit a long list of requirements, but you’ll also have to wait a long time for them to be processed. However, what’s appealing about this route is that you won’t have to give equity.
Seek professional investors
Once you’ve built up the confidence to pitch your business idea to the more experienced members of the industry, consider seeking investors. You could either go to a private group of venture capital investors or angel investors. A word of warning, though: this isn’t the most welcoming door you could knock on—not unless you manage to get warm introductions.
Go old school and barter
Who said nothing good could come from being friends with your neighbors? When you’re working on trying to build a business from the ground up, a helpful and collaborative network should be a ready tool in your arsenal. This would allow you to trade services with businesses within the same industry. But note that although you could do this with equity as well, it’s much riskier.
Join a startup incubator
The word “incubator” itself is indeed very fitting since there are a few startups out there that wouldn’t survive without this. With a startup incubator, you’re once again able to work with and get support from similar businesses. As a bonus, you might also get a chance to meet a willing mentor who could turn your business from just another Tuesday idea to a household name.
Try your hand at crowdfunding
Don’t raise your eyebrow at this idea yet. While it does seem a bit fishy since everyone who has an Internet connection can participate, crowdfunding for small businesses is supported by the JOBS Act. This was signed into law back in 2012 by then-president Barrack Obama. The process itself is straightforward. Plus, once you get the full force of the people behind your back, your business will be unstoppable.
Ask for an advance
If you have already exhausted all previous strategies and still haven’t gotten anywhere, then it may be time to grow some thicker skin and consider an advance. This could come in the form of early licensing or white labeling. Try reading up on both of these to see which could cater to your needs better.
Plan a more creative borrowing structure
Innovation is discouraged when there’s even the slightest sign of risk. But when your back is already up against the wall, it might be time to think about a different loan structure. For instance, instead of trying to get as much capital as possible, you may want to think of ways to acquire revenue faster.
Perhaps you’d like to think of yourself as someone who plans for a startup not because of the money but because of your vision. If that’s true, then hats off to you. Just don’t let your ambition cloud your judgment. While all the funding strategies listed above could be effective, that doesn’t mean that you’re free from risk. But don’t worry—you’ll be safe as long as you use your head and surround yourself with the right people.