Even if you have invented a unique product or plan to provide a service nobody else has thought of, ideas alone aren’t enough to fund a startup. At the end of the day, you will still need some ready cash to develop a business plan, research the market, produce prototypes, and promote your creation to potential customers.
So, in order to get off the ground, the best plan of action is to explore some sure-fire ways of raising capital. With this in mind, here are five suggestions on how to make money for a brand new enterprise.
Although financial trading always involves an element of risk, the potential rewards can be huge. Certain markets, such as Contracts For Difference or CFD trading, give investors much more freedom and flexibility too.
CFD trading allows you to open a contract for the difference in price of an asset, from the point of opening to when you close. Because this is a leveraged product, you only have to put down a small deposit for a much larger market exposure.
[Note: As pointed out to some of our Ventureburn readers CFD trading should not be a recommended alternative for startups keen to make some money.]
Crowdfunding may well be a relatively new way to raise business capital, but for certain organisations and industries it can be incredibly effective. Essentially, it enables anyone to contribute cash towards helping a business they like the sound of in exchange for incentives such as product exclusivity or a free gift.
But it all depends on generating sufficient interest on popular platforms like Kickstarter and Indiegogo. This means coming up with the goals of the business, future financial strategies, your target market, as well as how much money you need and why.
This is the ideal scenario for several startups, as a venture capitalist investor typically has a lot of money to offer as well as countless resources to help your business succeed.
However, venture capitalists tend to back larger organisations that have already demonstrated stability in the marketplace. On top of that, you might be asked to relinquish more control as well.
Small Business Loan
Despite the fact banks and building societies are more reluctant to provide startup businesses with a loan since the financial crisis, this is still the most viable option for several entrepreneurs.
But to secure funding from a financial institution, you will need to come up with a cash flow forecast, provide collateral, identify some co-signers, present a marketing plan, and demonstrate ability to manage the money.
Friends and Family
Last, but not least, you might be able to pool enough money together from close friends and family members. Some business owners are too proud to consider this option even though loved ones will usually want to help out in any way they can.
However, there are some negative aspects of borrowing money from friends and family. Seeing as a high percentage of start-ups fail, there is a risk of losing their money. Also, if your business proves a roaring success, they may try to claim some of the profits in addition to their original investment amount.
Image by Remeriz via Flickr