Pursuing Entrepreneurship: Three Options for Financing

No matter what kind of business you’re planning to start, whether it be in the foodservice, automotive, or real estate industry, you’re still going to need seed money. It’s an unspoken rule in the world of business that to earn money, you need to spend money first. And this is why you need financing.

Looking for funding is arguably one of the most challenging parts of establishing a business from the ground up. You may already have a business plan to put into action and goals that you want to achieve, but without funding, you won’t be able to grease up the gears in your machine. So, that’s why you’re here.

Don’t be discouraged if your original plans to look for funding have fallen through. If anything, you should use that as motivation to keep looking for the sake of establishing your business. Besides, you have yet to exhaust all the possibilities, such as these three financing options below:

Apply for a Business Loan

Starting a small- and medium-sized enterprise (SME) is no easy task. It may not look like much since it’s not a multinational corporation, but you have to remember that all those large global brands began as small businesses too. So, don’t belittle your business dreams because you’ll never know what can happen in the future.

That said, to grow your business to unprecedented heights, you must first get it off the ground. Luckily, many lending institutions offer working capital loans for SMEs such as yours. All you have to do is to look for the right one that can offer you the best solution for your business needs.

Of course, every lender is different. They each have their lending requirements, term loans, and financing solutions for different kinds of clients. If you’re not familiar with what kind of borrowing terms are appropriate for you, consider working with a financial expert that can offer you advice and guidance.

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Look for Venture Capitalists or Angel Investors

If you don’t want to apply for a loan, you might want to consider looking for venture capitalists or angel investors to get funding for your business. Both kinds of investors put money into startup businesses that have potential, but the main difference between them is whose money they use for investing.

A venture capitalist is an individual or a firm that uses pooled money to invest in promising businesses. Their funding usually comes from pension funds, investment companies, or large corporations that are hoping to diversify their portfolios. On the other hand, angel investors are people who use their own money to invest in businesses with potential.

Because of where they get their funding, venture capitalists tend to invest in already established businesses than startups. Doing so reduces the risks they could face, especially when losing their investments and not getting a feasible ROI. But angel investors are a different matter altogether.

Since most angel investors are also small-business owners and SME entrepreneurs, they are more likely to invest in startups, even if it’s riskier. So, if you’re having a hard time deciding who to approach first, you might want to consider looking for angel investors before you pursue venture capitalists.

Consider Crowdfunding

The last financing option you might want to consider is crowdfunding, which is the most modern approach on this list. Crowdfunding is done through established platforms that were made for the sole purpose of gathering funds from everyone who wants to invest in a promising invention or business idea.

Unlike applying for a loan from a traditional lending institution or pitching a business plan to experienced investors, crowdfunding is a piece of cake. All you have to do is create an account on your chosen crowdfunding platform, make a pitch to the awaiting investors, and wait until the donations start pouring in.

But of course, all those are easier said than done. If you choose to go with crowdfunding to gain capital for your business, you have to remember that you’re not the only one looking for financing. Because crowdfunding platforms are generally accessible to the public, you have to assume that you’ll be competing with hundreds of aspiring entrepreneurs for the same funding.

That’s why you need to take your pitch seriously. It may help if you treat this with the same preparation you would make for a pitch to a venture capitalist because people won’t willingly donate their money to a half-baked idea. If you’re truly passionate about your business, then you need to show that kind of fervidness to your potential investors.

No one ever said that choosing to forge your own path by becoming an entrepreneur would be easy. But at least, all your hard work and efforts will pay off once your business has started to take off the ground. So, until that day comes, you have to keep moving forward because it will be well worth it in the end.

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