Starting a business can be a daunting task, especially if you have no funds to get started. However, starting a business when you have no money is not impossible.
In order to get started, you will need to have a viable business plan and know how you will be making a profit in the future. Even though your ideal plan may demand many things in the future such as investors or partners, you can start small to begin with, relying on friends or family or even just yourself.
If your dream is to start a business of your own, and you are concerned about funding, here are a few top tips to get you started.
When starting a business, it is advisable to have money saved for the initial stages. Although it can be nerve-wracking to dip into personal savings, this is a common method for many entrepreneurs when starting out. Investing your personal money into your business plan demonstrates to others that you have faith in your own project.
Not only that, it encourages you to be ruthless with your business and assess, from an investor's point of view, how viable and profitable the business really is. Experts recommend having around six months worth of savings in order to cover initial expenses as it usually takes a minimum of six months in order to see incoming cash flow.
Ask your friends and family
It is often noted that starting a business relies on friends, family and fools as your first investors. However, it is important to remember that you are not going to your friends and family for charity, but because you truly believe that you have a viable business plan which they could support. That is why you should only approach these people once you are sure that you have a solid idea.
Friends and family can be your biggest supporters and your biggest critics so use them as a resource to bounce ideas and test your sales pitch for potential holes. When you borrow money from family and friends, the most important thing is to treat it as an official loan, making sure to get everything in writing and take your repayments seriously. You could also set up a crowdfunding page and approach your personal network.
Consider a small business loan
If you are looking to raise a larger amount of capital, it might be worth applying for a small business loan. There are many different financial institutions, including banks and online lenders, which can offer a range of small business loans in order to suit clients looking for initial investment funds or extra cash flow when starting a business.
Shop around and compare different options; you can usually get more favourable rates with a traditional bank but online lenders might be more flexible with their lending criteria so it depends on what you are looking for. This can be a good option especially if you are looking for a lump sum amount.
It might also be worth looking into business lines of credit - this could be better if you are looking to fund expenses as they are needed in the early stages of your business rather than a lump sum amount
Research small business grants and opportunities in your local area
It can be difficult to qualify for a small business grant; however, it is always worth exploring whether or not you might be eligible. Each grant will have its own specific application process and eligibility criteria. If you are eligible for the grant, you could be entitled to borrow money at low rates which could help you get your business up and running. When researching, look at government databases and also explore whether there are any resources available from your local small business administration chapters.
Approach angel investors
Angel investors could be your golden ticket when it comes to getting your business off the ground. Angel investors are individuals that invest their personal money if they see potential so they will only support you if they believe in your product and if you are able to demonstrate how it is going to make money in the future. As former or current entrepreneurs, angel investors may also adopt a valuable role as A company mentor which could be hugely beneficial for your business going forward.
However, make sure you've done your homework before approaching them. Meaningful networking is always going to benefit you more than going cold into a pitch. Make sure that you are approaching the right people and tailoring your approach to suit their interests.
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