Unless you plan on funding your business entirely on your own, where and how to secure funding will certainly be top of mind for most entrepreneurs. Here we break down the most important things to know about funding.
How to fund your business
How you choose to fund your business will determine how you structure and operate your business. Before you can jump into applying for funding, it’s important to determine exactly how much funding you’ll need.
Once you’ve determined how much you’ll need, it’s time to decide where the money will come from. There are a few main ways to fund your business:
Self-funding involves leveraging your own financial resources to support your business. Self-funding doesn’t necessarily mean the money has to come directly from your pocket. You can turn to family and friends for financial support or tap into your savings. The benefit to self-funding is that you retain complete control over your own company, however, you also take on all the risk.
Investors can give you funding in the form of venture capital investments. Venture capital is usually offered in exchange for company shares, and sometimes an active role in the business. Investors can offer you the money you need, but it comes at the price of giving up some control of your company.
A small business loan is the go-to solution if you don’t have the funds, and want to retain complete control of your business. In order to secure a small business loan you will need a business plan that includes financial projections into the next 5 years.
Grants & Crowdsourcing
Last but not least you can crowdsource the money or apply for government grants. Crowdsourcing is relatively low-risk, but crowdfunders usually expect a product or perk in return. There are many programs that support small businesses. Check out SK Biz Grid for grant and incentive programs.