A startup is a new young business founded by one or more entrepreneurs based on a unique idea, product, or service. Typically, funding of startups depends on attracting venture capitalists or angel investors, or help from friends and family.
You have been thinking about starting your small business, you have a great business idea, and a unique product or service for your market. All you lack is an investment in your startup. Check these five most effective ways to fund your startup business.
1. Friends and Family Investment
Friends and family are more likely to believe in your great business idea and support you. Make sure you respect and protect their investment by finalizing all the financial family loans officially, so everyone is on the same page. Unfortunately, it is easy to lose friends and family members over business and money issues.
Basically, it’s a way to begin your startup with your own funds to run the business. You may consider digging into savings, low-interest credit cards, or get lines of credit on your property. With this option, an upside and downside at the same time are that you only depend on yourself and the financial stress solely lays on your shoulder. If your startup is a huge success – great for you. But if something is not working out – you may end up with a substantial debt that you need to manage.
3. Small Business Grants and Loans
Small Business Administration provides various grants to small business owners and grants to states and eligible community organizations to promote entrepreneurship. Also, make sure to check your local and state Chamber of Commerce for resources for startup entrepreneurs and small business owners. For example, The Woodlands Area Chamber of Commerce has a dedicated resources page with listed Coronavirus Relief options including Texas Small Business Assistance Loan Program information. You can also try your luck with some banks or lending companies willing to offer loans for small businesses.
Related: Small Business Owners Resources
4. Incubator and Accelerator
Even though these two words are often used interchangeably, they are not entirely the same. Both programs provide guidance and support to startups with the final goal to make startups valuable in the eyes of investors. Incubators provide support to new startups in their birth stage when there is just an idea, but no business model yet that would allow the startup idea to become a full reality. Accelerator helps existing startups on the market to grow and build up to reach investors.
5. Keep your day job.
Well, this one is a no-brainer, and also might not sound as exciting as all other options. However, with your 9-5 job, especially if it could be done remotely now or with time flexibility, you might be able to wear multiple hats at the same time and slowly but safely start your new business while making sure that all your bills are covered. Downside – you have to be prepared to work late, miss weekends, dedicate your vacation time to your new startup, and sometimes miss opportunities to concentrate on your small business.
You have plenty of choices to fund your startup. It is amazing to believe in your idea and envision a bright future for your business, but be prepared and make smart decisions. Reach out to the small business community, for example, The Women’s Council of Entrepreneurs, in your area for support, advice, and professional consultation.