The economic landscape is dynamic, and as we move through the years, the way we work changes. Currently, entrepreneurship is having a moment. There are several reasons for this, the most common ones being:
- More people want to be in control of their work and earnings since job instability is on the rise
- People who choose to keep their day job want to supplement their income as a single income doesn’t cover all their expenses
- People are reluctant to rely on a single income stream because if they lose their job, they won’t have any income
- Local governments encourage entrepreneurship to develop the local economy and create jobs
- People are encouraged to shop locally instead of relying on outside exports. Covid 19 has demonstrated that relying on exports from other countries is risky because, if borders close, that supply will be cut off
With this in mind, if you have an innovative idea you know will do well as a business, now is the time to get it off the ground. Timing is everything in business, especially as an entrepreneur. If you launch too early when you’re not prepared, you may set yourself up for failure, but if you wait a long time, someone else may launch something similar, beating you to the market, or the economic climate or customer demand might change.
A challenge many entrepreneurs face is finding the money to fund their businesses. Even if you have money in savings, it’s a good idea not to invest all of it into the business. New companies usually take at least a few months or longer to generate a profit, so if all your savings are used to start the business, you will have no money to live on. A better solution is to use a portion of your savings as capital and get the balance from another source.
There are a few sources of funding available to start-ups and entrepreneurs, so you must research a few and pick the one that’s a good fit for you.
Below are some popular ways entrepreneurs fund their businesses.
Crowdfunding may work for you if you’re tech-savvy and have a new, exciting product. Crowdfunding allows you to get many people to contribute small amounts to your business, and the more people you reach, the more capital you can raise.
To successfully launch a crowdfunding campaign, you need to have a compelling story about your product or brand that grabs public interest. You can use popular crowdfunding sites like GoFundMe or Indiegogo to set up your campaign and widen your reach using social media.
People who like your business idea can invest in your company in exchange for equity in the business, a free product, special offers, or be the first to hear about new developments in your company.
Personal loans are a good option when you’re just starting because, unlike other loan types, personal loans can be used for anything, including to fund a new company. Folks with good credit can get a personal loan from a traditional lender like a bank. The advantage is that banks typically offer personal loans with reasonable terms and lower interest rates. This will comfort you as an entrepreneur knowing that you have enough time to repay the loan, and the installments will likely be manageable.
If your credit score is less on the lower end, you are not out of options. While banks may be reluctant to offer you a loan, you will likely secure a loan from other lenders that offer bad credit loans. For example, you can apply for CreditNinja’s Texas loans or a payday loan. Before committing to a bad credit loan, read the terms and conditions carefully. Bad credit loans often have high-interest rates and require you to repay your loan within a very short period. In this instance, you will probably need to repay the loan even before the business sees profits.
Find a Business Partner
Having a business partner may offer advantages that go beyond just financial. By entering into a partnership with someone who is involved in the operations of the business, the weight of running the business can be shared. While you will have to give up some control of the company, your partner can provide their expertise and skills over and above their capital contribution. This can result in the company becoming profitable sooner.
There are many partnership agreements so think about what will work best for you before looking for a partner. You may prefer to run the business solo, in which case you would need to find a silent partner who will not want to be involved in running the business and who only wants to make a financial investment in return for a share in the company.
If you decide to have someone who is to be involved in the business, you must decide how much involvement you would like them to have and how much of the company you are willing to give up. For example, you may decide you’re only comfortable with a 60% / 40% split, where you are the majority shareholder and the primary decision maker. Also, be prepared to negotiate and consider what you’re willing to compromise on and how much you’re ready to give up.