Once you have a great idea to start a new small business or expand one that already exists, the next all-important step in the process is to secure funding for it. After all, without financial resources, the business you envision stays trapped in your imagination. Try these approaches to getting the funding you need.
1. Approach Family Members
A 2016 survey from Bank of America polled 1,000 entrepreneurs in the United States and found over one-third received funding from friends or family members via loans or gifts. You might hesitate to ask your parents for help, especially if they assisted with financing your education not long ago, but it could be a smart move if they’re in a position to help you.
Think about asking others who may be able to help too, such as cousins or grandparents. If those people are business owners or fully on board with your efforts, that’s even better.
2. Pawn Your High-End Luxury Items for Quick Cash
An emerging trend shows an increase in wealthy people going to high-end pawn shops and parting with their luxury items in exchange for fast cash flow to make their business ideas become realities.
Maybe you got a Rolex watch as a gift from a late wealthy relative, and it’s collecting dust in a drawer because you only wear it once a year. If the person who gave it to you always urged you to follow your dreams, you could take that as encouragement to pawn the watch for cash.
Or, maybe you’ve inherited a rare fine art piece that’s undoubtedly beautiful and high-quality but doesn’t match the décor in your home.
These examples show that even if you don’t have a house full of expensive possessions, a few well-chosen ones could help you bring in money quickly. That could be important if, for example, you’re trying to close on a deal for property related to your business and don’t have time to go through the processes required for slower funding methods.
3. Collect the Necessary Documents for a Bank Loan
If you’re an entrepreneur who prefers to fly by the seat of your pants when seeking funding, that approach, unfortunately, won’t work when applying for a loan from a bank. Financial institutions require specific things from you. The representatives there will ask for a polished business plan, a succinct description of how you’ll use the money, your businesses’ financial information and more.
Once you gather those things, organize them neatly in a folder. Then, when it’s time to speak to the loan specialist and make a good impression, you won’t feel or appear flustered.
Even if you don’t think now is the right time to apply for a loan, get all those documents together anyway. Then, when or if you’re ready, you won’t have to scramble around looking for them as your stress level rises.
4. Use Data to Prove Your Point
When approaching people who may invest in your venture, it’s crucial to back up your claims with data. For example, instead of merely explaining why your business idea will succeed in the marketplace, provide hard statistics that show an existing gap you can fill or some other problem your company addresses.
EducationSuperHighway is a nonprofit organization dedicated to improving internet speeds in K-12 schools so that students can take advantage of digital advancements. It’s working with nearly two dozen state governors and has achieved a reach of 22 million students.
Before it got to this point, though, the group wisely used data to prove that internet connectivity problems existed and even to hold themselves accountable to early investors. In short, if the organization couldn’t show it was doing worthy work through data, they emphasized that investors shouldn’t feel obligated to give them another cent.
Research ways to compile data that convinces potential investors why your idea is different than what already exists and that there’s a genuine need for it. Taking that step strengthens your case rather than making it seem like you have little more than a firmly held opinion.
5. Look for Microgrant Opportunities
Perhaps you’re in a situation where you only need a small amount of funding for your small business that you’ll use for better office furniture or to invest in a printer that doesn’t break down more often than it works.
Those scenarios are excellent for microgrants. As you might realize from the name, they involve community members or professional investors collectively giving small amounts of money to successful candidates.
The Awesome Foundation funded over 3,400 projects and operates in more than 16 countries. Grant recipients get chosen monthly and receive $1,000 for their projects.
A more localized effort in Charlottesville, VA is called Charlottesville SOUP. It provides microgrants for arts-based projects. Past recipients include a graphic novelist and a fashion designer.
Grant candidates stand in front of audience members who have each paid $10 to hear about the projects while eating a soup dinner. The spectators’ entry fees also act as votes. At the end of the night, the funding seeker with the most ballot box dominance immediately receives a crowd-funded amount for their project.
These dinners occur monthly, and the first one was held in January 2013. So far, the initiative has awarded more than $20,000 to people in the community who needed funding for their efforts.
Creativity Could Take You Further Than Expected
You’ve undoubtedly had to use creativity to develop your business idea. So, why shouldn’t you try to ignite that creative spark when looking for funding? When possible, it’s ideal to take a diverse approach by looking for traditional sources of money for your business such as bank loans but also thinking outside the box and exploring the lesser-known opportunities.
Bio: Nathan Sykes is the editor of Finding an Outlet, a source for the latest in IT and business news and trends.
