By nature, startups require that creative edge in order to stand a chance in their market. Alas, having an authentic idea carries no more promise than having an audience for its success, because you need substantial initial capital to turn your idea into a business-worthy reality. As things stand today, the ease with which people start and end businesses is staggering, giving hope to so many aspiring innovators to stand their ground in the face of competition. However, numbers often don’t go in favor of startups, as close to 30% of startups that fail do so because they run out of money.
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To prevent such a prevalent cause of failure from the early stages of your business development plan, you need to be sure that you have a financing strategy in place as well. In different economies and different industries, different financing solutions will yield the best results, and it’s up to you to weigh your options and find the most promising one for your own startup.
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1. Find reliable investors
Sometimes even the smallest of startups counting no more than one or two people require serious investments to take off properly. In such situations, you can look for investors that specialize in your target market who understand the need for a hefty initial investment, and have a history of working with startups in your niche.
Make sure that you have a powerful presentation and a thorough business plan ready to show to your potential investors. Otherwise, you risk losing your investment because they might feel you’re not taking your project seriously, or that you don’t know how you’ll allocate their funds properly. They want to know where their investment will go, and what you can offer in return.
2. Apply for unsecured loans
Having some form of collateral is one of the key issues for innovators when they need a bank loan since they might not have anything to offer that the bank will approve of depending on the size of the loan for your business. Instead, you can apply for unsecured business loans that don’t insist on any form of collateral, and that will give your startup that much-needed cash injection to start your business smoothly and in practically no time.
Although such loans are not your conventional bank loans, you can find reputable institutions that specialize precisely in that kind of lending, which means that you can actually focus on building a business instead of ensuring that loan. Unsecured lending exists to help smaller companies find a safe starting point, so you can use it as your own pair of financial wings to launch your startup.
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The allure of online platforms that let you promote your startup idea to potential investors, both professional and regular people who like your idea, is growing one day at a time. With popularity also comes a wider selection of those platforms where you can find interested parties in your idea, so you’re not limited to one website anymore. However, crowdfunding is not an ideal pick for all startups. If you have a genuine business idea that can generate serious capital, crowdfunding is a great option, if you’re ready to go to great lengths to promote it.
What makes these platforms so brilliant for innovative companies is that you not only promote your business for the sake of obtaining that initial cash injection, but you also get the chance to feel out your target market. That benefit alone is enough to get people promoting their projects on Kickstarter and similar platforms, to see how well their ideas will pan out.
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4. Rely on your nest egg
Business ideas rarely appear out of thin air, with zero effort poured into defining them properly. In fact, talk to any startup entrepreneur, and they’ll tell you they likely spent a lot of their time refining their idea before they shared it with anyone, just to make sure it will present a worthy competitor in their target market. Even before that inkling of an idea shows up in their mind, they save up for when that idea starts to evolve – and that’s your startup capital right there.
However, as the day of the launch nears, you should be aware of all the potential financial drains that can affect your initial funding pool. Make sure that you collect enough money to fuel your business beginnings so that you don’t have to halt any operations before your idea gets a fair chance to take a piece of the market. Sometimes, you can even ask for friends and family to pitch in and further strengthen your own savings.
5. Seek out a financial partner
Some partnerships are born out of vision, others out of necessity. Either way, you can definitely find a like-minded entrepreneur at heart that might have the means, but not the idea to join the startup ranks just yet. Your vision might be something that you can share so that their capital joined with yours can allow your idea to thrive.
When you’re on a hunt for the right strategic partner for your business, make sure that they have more than just the financial means. Look for someone with knowledge and perseverance to help you run your business successfully, and who will reduce, not increase liability for your company.
Financial stability is one of those key pillars of business success, especially in the startup world. Use these ideas to fund your business properly and ensure a steady rise to the top for your future startup brand.