Source | Entrepreneur
Running your own business is a great way to experience career flexibility and financial independence. While it’s an idea that has crossed nearly everyone’s mind at one point or another, very few actually capitalize on such thoughts. There are a number of common barriers that are inherent to the startup process itself, but none are more critical than the first step: obtaining the necessary funds to begin with.
1. Enter into a partnership
One of the most common and most straightforward methods of funding a new business, investing partners can bring a lot more to the relationship than startup capital. While some prefer their investors take a passive role, others involve key stakeholders and partners in every part of the decision-making process. With industry knowledge, firsthand expertise and a dedication to the profitability of your company, third-party invests or partners can be a boon to the entrepreneur who is lacking funds.
2. Take out a loan
In some cases, taking out a loan with your local bank might be the only option when it comes to launching your business. Obtaining a loan can be a risky endeavor, especially with the lack of investment capital to begin with. It’s important that you understand all of the language within your contract and that you are clear on your payment deadlines, interest rates and any other fees. You’ll also want to avoid taking out a loan for more than you need, as such oversights can be difficult to recover from.
3. Pursue crowdfunding
A relatively new concept, crowdfunding campaigns have been used to fund everything from next-gen electronics to personal clothing lines and even Hollywood movies. In fact, the Veronica Mars feature-length film, which debuted in 2014, raised nearly $6 million in investment capital — almost $4 million more than what their campaign was originally asking for.
Microsoft’s Oculus Rift device, a virtual reality headset, also enjoyed crowdfunding success to the tune of $2.4 million. Moreover, all of this capital was raised within a period of 30 days. Not only does this showcase consumer interest in modern virtual reality, but it also shows their willingness to contribute through online fundraising platforms.
4. Take advantage of your credit
Entrepreneurs with exceptional credit can even use these accounts to fund their own startups. In fact, nearly 60 percent of small business owners relied on credit cards to avoid falling into bankruptcy during the 2008 recession. Although some would rely on their personal accounts, many banks and institutions offer cards that are meant specifically for small business owners or startup entrepreneurs.
5. Obtain state or federal funding
Pursuing state and federal grants is really a no-brainer when it comes to raising funds for a new startup. Although your options may be limited due to your location or your chosen industry, there are some great opportunities available to those who do meet the stringent qualifications associated with modern business grants. Unlike a loan, grants never have to be repaid; thereby freeing up some of your initial capital and giving you a head start on the road to success.