I Have A Business Idea but No Money | 7 Simple Ways To Fund Your Idea
I Have A Business Idea but No Money
Many people have a great business idea, but they have no money. If you are one of these people, there are many ways that you can get money to launch your idea.
Not having money is not a good reason not to pursue your start-up idea. In fact, some of the most successful businesses in the world were started by highly qualified people but had limited funds.
Find Potential Co-Founder
One of the best ways to get your business started is with other people. There are plenty of ways to go about this, but one of the most popular and effective tactics is to team up with a potential co-founder.
Co-founders can be found locally in start-up communities, among family members and friends, or online in sites like CoFoundersLab.
Regardless of which strategy you choose, you should be looking for a co-founder that brings complementary skills to the table, helping you fill in your own weaknesses.
You will have to do some research to find a potential co-founder, but this can pay off in the long run. You must take the time to interview them and ensure that they are a good fit for your idea.
If you are looking for long-term partners, you should aim to find a co-founder that you plan to work with for the long term.
If you have no money, it is important to learn how to get money. Researching your options will give you the information on obtaining funds that may be necessary to launch your business.
Every start-up has a unique way of obtaining funding, but most startups use a few common strategies. One of these popular methods is selling equity in your business idea.
If you are lucky enough to have an extremely valuable business idea, you may be able to attract investors to your company. Investors will often give you the money that you need in return for a percentage of company stock.
The investor will profit when your business takes off, so make sure that you only take on investors that see value in your idea. Have a solid plan in place before seeking out any investors.
Consider Looking for A Grant
Another common way for startups to get money is through grants and awards from local and national government organizations.
Examples of some of the grants that you may qualify for include:
The SBIR (Small Business Innovative Research) Grant is available to small businesses in the United States. The Federal Government provides this grant in order to promote technological innovation and economic growth.
There are a variety of amounts and timelines for these grants and different qualifications, so it is important that you do your research to find out more information about this grant.
Consider Seeking for a Bank Loan
Another approach would be to speak with your bank. You may need to start a new bank account in order to receive credit from your bank. The amount that you will qualify for depends on the type of loan that you are applying for.
If you plan to make payments for some time, then you should consider a long-term loan. If, however, you only need the funds for a short period of time (6 months or less), then it is best to take out a short-term loan.
You should never borrow more money than you have planned on using, as this may result in difficulty later on. Although it is important that you take out a loan, it is also important that you do not take out so much that it creates a financial burden for you.
There are many options for loans available to startups and small businesses. You should always research your options and pick the loan most suitable to your needs.
Before applying for any loan, however, you should thoroughly research lenders to make sure they are legitimate.
Never sign a loan that you don’t understand. If you do not understand the loan terms or how long the payments will be, then you should not sign them.
Find Angel Investors
Often, the entrepreneur’s best bet for finding funding is to have an angel investor, someone who understands the entrepreneur’s idea and wants to help see the business grow. Most people do not know what an angel investor is, and even if they do, they may not be able to find one.
Angel investors are the best source of startup funding, but you have to meet certain criteria in order to qualify. To get an angel investor, you need to:
- Have a great idea of your business and its potential impact on the market. Be able to successfully execute financially with your ideas.
- Have a substantial amount of financial support to accomplish the goals of your business plan.
- Have a clear plan and be persistent in the pursuit of your idea.
- Have good timing, meaning that you need to find an investor during your start-up phase.
Angel investors are the best source of startup funding, but they rarely invest in small businesses. They usually invest large amounts (anywhere from $50,000 to $5 million), so you will not find many angel investors for small businesses.
Angel investors are willing to give their investment capital in exchange for equity in your business venture. It is important that you only take money from angel investors that you trust.
You should evaluate their experience and make sure that they will be a good fit for your business.
The next step is to create a business plan, which is essential for fundraising. The purpose of a business plan is to help you attract investors or lenders and give them the information they need to decide whether or not to invest in your idea.
Your business plan should consist of the following:
- Executive Summary; Generally, this is the first page of your business plan. It describes your business and its goals. You should include information about why you started your business in the first place, what you hope to accomplish, and what kind of future impact you want to have on the market.
- Business Description Including Products, Services, Market Information, Competitors, Current Situation and Your Plans for Growth. This is another important section because it describes your products or services.
- For a service, be sure to include information about how your service is different from others. For a product, provide information on the demand for your product and how it is unique from others.
- You should also describe the markets that you are trying to reach, whether locally or nationally. You should also include information about your competitors and their market shares. You should also describe your current business situation and explain any plans you have for growth.
Borrow from Friends and Relatives
You can also borrow money from friends and family to get your idea off the ground, which may involve convincing them by offering collateral.
However, if you ask for a loan from someone who is close to you, make sure that you are completely honest with them about your idea and the risks involved. If you fail to disclose everything, it can cost both your friendship and your business.
If you are thinking about asking for a loan from friends and family, there are still some basic steps to follow:
- Don’t be afraid to ask! A lot of people are skeptical about borrowing money from family and friends because they fear putting their relationship at risk.
- Be honest with your family and friends about how much money is being borrowed and how the money will be used.
- If you have no collateral, offer an interest-free loan for a short period of time, pledging to pay the money back at a later date.
- Ask for smaller amounts of money from the people that are willing to lend you the money and slowly try to increase it every few weeks or months until you reach your goal amount of loans.
- Start slowly by borrowing a small amount of money from the first person you are willing to borrow money from and gradually work your way up to larger & larger amounts of money that will eventually make your lifestyle acceptable towards those that will lend you money.
Get a Small Online Loan
You can also look into getting a small business loan from an online lender. However, remember that even small loans can be expensive. When looking into small business loans, consider whether or not there are other sources of financing available to you (such as granting agencies).
Like any other loan, you will be required to give the lender collateral. However, if your business is new, you may not have enough collateral to convince the lender that they will get their money back.
Therefore, it is important to make sure that you take only what you need to fund your business and work towards building up your business to pay back the loan in full.
If you are offering a real property as collateral, make sure that the property is worth at least twice as much as the loan. If you are offering a personal property as collateral, make sure that it is not easily transferable and that there is a clear title to the property.
Regardless of the type of collateral you offer, provide clear proof that your business will be able to pay back the loan.
You should also include information about how much money you are looking to borrow. How long do you plan to use the money?
To make sure that you get the best interest rate possible, make sure that your business is at a stable point from the start. If your business is not doing well, you will be charged a higher interest rate.
Seek Out Crowd Funding
You can also seek out crowdfunding for your idea. Crowdfunding is a modern way of raising money for a business or project. It involves creating a project on a site such as Kickstarter or Indiegogo and then spreading the word about your idea to your family, friends, and social network.
These sites allow you to create Project Websites that describe your business idea, offer perks for different levels of donations (such as T-shirts, coupons, discounts, or other incentives) and ask for donations from anyone with Internet access.
Many people, including celebrities, have used these sites to start their businesses. It is important that you take the time to thoroughly understand the crowdfunding process before investing any time or money in it.