Best Proven Ways To Fund Your Business Idea
With your idea safe, now it’s time to start getting the funding you
need. Your planning stage should have given you an idea of just
how much money you need, so now all that is left is to find out
where you’re going to get that from.
Here are some of your best options how to raise money for your business idea…
You’ve come up with the next Facebook, or the ‘Twitter for
Athletes’, but now you need money to pay for the coding, the web design, the hosting and the marketing. You’ve spoken to
consultants and to coders and you have an idea of how much this
will involve.
And you can’t afford it…
This is the intended use for a platform like Kickstarter or
Indiegogo. The idea now is that you head onto one of these sites,
describe your business in detail and demonstrate its usefulness in
some way and then ask for the funds necessary to make it
happen. If people are excited about your idea, they may put the
money forward.
Note that Kickstarter is by no means ‘easy money’ though. In
order to be successful here, you’re going to need to do a lot of
things right. This means carefully considering the precise amount
of money you ask for, offering great incentives that give people a
real reason to put their money down and creating a high-quality
video with professional production values. I can’t stress this last
point enough: if you want people to take your idea seriously, then
the video you create needs to really sell it and show that you are
capable of putting something impressive together.
Read: Proven Ways How To Build Your Idea And Earn Millions
Finally, you should always have some kind of working prototype
to show. If you are making something like Uber and you can’t
have a prototype in place, then at least consider designing the website and building a mock-up so that you can better explain the idea to people.
Other Sources of Cash
There are many other ways you can get the money you need to
fund your new idea too. One great avenue open to many
entrepreneurs that you might not be aware of for example, is to
use PayPal’s ‘Working Capital’ service. This is a business loan
from PayPal that is unique from a bank loan in a number of
different ways.
For starters, it asks for a fixed, single fee that
doesn’t go up over time – which makes budgeting much easier.
Secondly, PayPal’s loans allow you to pay them back through
PayPal. That means that PayPal will automatically take a small
cut of all payments that come in through the payment processor.
You can choose how quickly you want to pay the money back by
picking a percentage and this will be docked off all your earnings.
This is perfect for an online business that accepts PayPal
because now you will only have to pay back the loan as the
money comes in – with no negative repercussions if the business
is slower to get going than you anticipate!
PayPal loans also pay no attention to your credit rating and they
don’t impact your credit score either. This means you won’t risk
ruining your credit if things do go a little wrong.
Rather not use PayPal? In that case, you could choose to go the
traditional routes by taking out a business loan from your regular
bank, or you could take out a credit card loan. Credit card loans
only go so high, but they regularly offer 0% APR which will make
things cheaper for you.
Another option is to go to a friend or a parent – which of course is
risky, to save the money yourself, or to ‘bootstrap’.
Bootstrapping is one of my personal preferred methods. This
involves raising the money for your big idea as you go, often by
using smaller or more tested business models in the meantime.
This is perfect if you are a service provider looking to productize
that service – all you need to do is to sell your current service and
gradually build up more and more profit from that which you can
continuously reinvest back into your bigger idea.
Bootstrapping goes hand in hand with creating a lean business
and coming up with a fail-fast business model. In other words, if
you make your business model as affordable as possible, then
you can afford to lose a bit of your regular profit by investing in
research and development for that new idea.
Finding Investors
Finally, your other option is to go the more ‘conventional’ route
and just find an angel investor. This means that you’ll be giving away some of your equity but in exchange, you should often find
that you get advice and guidance from those investing.
This is perhaps the scariest and most ambitious way to raise
money too, which is why many entrepreneurs will avoid it – but it
is also one of the more tried and tested ways to get your idea off
the ground. Just make sure that you have all your projections,
costs and market research to hand and ready to show. An
investor will not help you unless they can see that you have
thought everything through and that you have validated your idea.
Try to find the right investor for your project and keep in mind that
if this is a disruptive new software or technology, then some of
your investors might have a hard time selling it. Consider this an
early test – if you can’t sell it to them, how will you sell it to
anyone else?