Start Your 2018 Year with the Funding That Your Business Needs!
Funding your new venture can be frustrating and discouraging. Some sources of funding, such as self-funding involve little scrutiny while others, such as a bank loan, demand seemingly excessive scrutiny. There are a number of ways of approaching the funding situation. Here are 5 types of venture funding divided into groups from less scrutiny to more.
Self-funded, credit card, home equity
This is the easiest and involves the least scrutiny. You can fund your venture yourself through savings, using your credit card, or taking a home equity loan—assuming, of course, that you have equity in your home, with few questions asked. There are relatively few forms or applications to fill out and you can access the funds almost immediately.
Family and friends
Another form of funding that involves little scrutiny. In this case you are relying on the kindness of your family and friends to help get you started. You will find out what people think of your business acumen and your business idea based on the number of people and the amount they are willing to fund. Involving family and friends in your business venture may not be the best solution if there is a chance of failure and losing their investment.
Barter or equity
Bartering for services can often work to save you some initial money, assuming that you offer or have access to a service that the other party needs and involves little scrutiny of your business. Giving equity in your company is another way to gain the services required to get your business off the ground. Make sure the person is a good fit with you as they are getting an ownership stake in your company.
Crowd-funding, Incubators and Government Funding
Incubators keep your business “egg” warm and protected until it is ready to “hatch”. They provide typically smaller amounts of funding but lots of advice and expertise to help your business succeed. Crowd-funding relies on your business idea being something that many other people find valuable or worthwhile, so buying a frozen yoghurt franchise might not be as well funded as say, renewable energy. There are Government small business loans that are made available by various levels of government. It will involve some searching and some application forms, but this can be a valuable source of startup funding.
Investor, Venture Capital, Angel Investor, or Bank Loan
These sources of funding involve a great deal of scrutiny and will often want to see revenue projections, marketing plans, other sources of funding, etc. before investing. There will be forms and applications. One of the benefits is that you can often obtain excellent advice from experienced business professionals who can help guide you through the rocky startup phase and help put you on the right path for success.
In the end, the type of business you want to startup will help you to decide for which forms of funding to apply, some are more amenable to certain businesses, others not so much. The takeaway here is that there are a wide variety of funding sources with varying amounts of scrutiny for you to investigate before starting your business.
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