We are a part of the Entrepreneur Generation. People have realized that trying to climb up the corporate ladder makes no sense anymore. A majority of millennials believe that they need to raise money, forge their own path and not let their lives and careers be dictated by employers. They want to do things that interest them, earn comfortably and aspire to make a difference in the world they live in.
You would be aware that starting out on your own do entail some risks. Even home based businesses require an initial investment in terms of time and money, and you need to have savings to live on, especially if you have a young family with kids. Raising money is the biggest constraint for all aspiring entrepreneurs and is the sole reason why many hesitate to leave their day job and follow their dreams.
Money and finance was hard to come by until a few years back and was a major reason why startups fail. But with the stupendous success of startups and billion-dollar exits made by investors have made, it far easier for entrepreneurs to access investment.
First Things First
Before you get started, you need to have a strong financial business plan. That means, you should understand the costs of your business and the team that you will need to be successful. Once you have a clear idea of how much money you want raise, then you can get out there and secure the cash. Here are a few methods for you to finance your business in a hassle-free and quick manner.
Bank loans are hard to get but they offer among the lowest interest rates and fair repayment terms. But big banks require substantial paperwork and they also have stringent requirement criteria.
Banks usually prefer to lend to businesses that are a couple of years into operation, have established revenue streams and are growing. For example, banks like to approve restaurant loans that have some established income and customers. Or, in other words, startups and yet-to-be established businesses do not find much favor with banks.
Small Business Administration (SBA)-guaranteed loans are popular among small business owners and entrepreneurs. You can apply for a SBA loan at any of the banks that provide loans approved by SBA. There are two types of loans that SBA offers – 7(a) guarantee small business loan and the 504 term loan. 7a loans are the most common with small ticket loans also provided. The 504 term loan gets only 40% backing from SBA and the principals are in the range from $1.5 million to $4 million.
Though they are well known many business owners opt for alternate lending sources because SBA loan approval is a time consuming process and calls for elaborate paperwork.
But they are options you can consider.
Bootstrap Your Venture
As impatient as you may be to get started on your own, it is best to work hard and save some money before being your own boss. You will have enough to live on as your venture goes through initial birth pangs. Also, in the initial phase it is wise if you fund your business with your savings and refrain from taking on financial burden, responsibility, stress and tension that comes with investor money.
It usually takes a few years for any business to find its feet, so if you have enough money in the bank you will find it possible to meet business expenses and cover essential living expenses as well. This is a smart strategy to use your own resources to fund your business. It may take a bit longer to raise money. However, you will probably be more disciplined and successful because of it.
Take Up A Side Job
So you have quit your corporate job and are a full-time entrepreneur, but are finding financial stress too hot to handle. This happens with many young professionals who leave the comforts of corporate life to do something on their own. To balance things out, there are many side gig ideas to raise money quickly.
A good amount of money will have to be pumped into the business and there is no specific time frame when you can expect revenue to pick up. Till then you need to hang in and manage life at home as well.
Consider taking up a side job that will allow you to earn some money without taking all your attention away from the business. Once things are smoother you can give up your part-time job and plunge into your growing startup.
Online Financing Sites
There is nothing that cannot be found online and this goes for business financing also. Ondeck, Kabbage, Lending Club and Funding Circle are some of the online companies that provide alternative loans to small businesses.
They usually have higher interest rates than traditional bank loans and are pricier. But they have grown in popularity over the years because they are time-saving, quick and convenient. Small business owners are juggling many roles and cannot ignore the online loan application processes which often are 50 times faster than application processes in traditional banks. Entrepreneurs also get to know whether they are eligible for loans in a matter of hours.
So you can consider going online to meet your financing needs quickly and conveniently.
Prosper Marketplace and Lending Club are the leaders in the peer-to-peer lending space in the US. There are also many other sites like Upstart, Kiva Zip, Zopa, Peerform, SoFi, Pave and Daric that are equally good options for you to check out.
Biz2Credit is an online platform that connects small businesses looking to raise money with lenders. BoeFly is a subscription service that gives you free access to over 4000 lenders and doesn’t even charge transaction fees. Lendio is an online service that connects qualified businesses with suitable loan providers.
There are many startup and real estate crowdfunding sites like GoFundMe that entrepreneurs can use to raise money. These types of sites are actually used to raise money for all types of causes. If you are starting a social business, you can also raise money for charity, volunteering, medical aid, education, competitions and events. Any business can leverage these types of funding for various projects. Especially as an entrepreneur, it could help secure that much needed start up costs to get you up and running.
Another popular funding raising website is Fundly. They allow you to raise funds for yourself or your business. Like many of the other fundraising platforms, they offer secure payments, mobile funding pages and a guide to raise money online. Regardless of where you are, these types of sites to make it easy to raise funds in major cities like New York, San Francisco and Chicago as well as rural areas throughout the United States.
Make Use of Your Assets
Another quick, but often tough, method to raise money is to make use of your assets. Home equity loan is the most popular form of raising funds, and also offers low and flexible interest rates. You can take a loan on the equity you have in your home, which is the value of your home minus what you owe.
The risk involved is that if your business fails you risk losing your home as well.
If you have precious jewelry you can mortgage or sell them to get a handsome amount of money. Selling gold to gold buyers usually give you good rates for the yellow metal and the money would be more than sufficient to ease out the lumpy cash flow in your fledgling business.
Many entrepreneurs recount stories of having to sell off their favorite car or their vintage watch in order to pursue entrepreneurial dreams. Rest assured that you can buy them again once your business starts doing well.
Use Your Network
If you are really try to raise money, you are going to want some help. That is why you should certainly try to get some of your friends and family on board. Now, that does not mean that you have to go asking them for their money. Maybe instead, you can ask for their help in raising the funds. Ask them if there is anything they would like to get rid of that is still in good shape, and then you can sell that to help finance your venture. Or if you have friends in high places, ask them to see if any of their business contacts are looking for an investment opportunity. To raise money for business, you have to be creative and you certainly are going to need some entrepreneur financial tips. So, enlist your friends and family to help you raise money faster and easier.
Borrow From 401K Or IRA Accounts
In an urgent situation to raise cash fast, you can borrow from your retirement accounts. This usually gives you access larger amounts of capital quickly. However, you will have to pay a fine or penalty if you are under the age of 59 and a half. Still, this could be a great option despite the added cost. For older entrepreneurs, retirement accounts could be one of the best ways to raise money fast.
Starting your own business is the best thing you can do, provided you are willing to sweat it out to see it succeeds. Once you work out how you are going to meet the financial needs of your business, you can consider half the battle won.