What are 3 Realistic Ways to Fund Your Startup?
| 5 minutes read
- Apple Inc. and technology giant Microsoft, investing $108 Billion in SoftBank’s Vision Fund, a conglomerate holding company, headquartered in Tokyo, Japan- reported by Businessinsider.
- As per the Techcrunch report, a Japanese electronics manufacturer, Sony announces a $185M fund to invest in tech startups. It will help the company to innovate- a new path-breaking technology.
- Airbnb Inc. a reputed American online marketplace company that offers various experiences of travel, homestays, and lodging. As per BloombergQuint, a business online portal reported, Airbnb has funded $160 million for a small, luxury-rental apartment startup & overall an investment in business-travel startups.
What are 3 Realistic Ways to Fund Your Startup?
Whenever we talk about startups, the crunch of cash flow or the early closure comes to our mind. But do you know multi-billionaire companies invest in startups? Do you know the reason why?
Startups are one of the best and experimental platforms where there is a scope of the invention of technology at its best. Multinational companies believe it is a best practice to face minimal risk with maximum output.
There are various ways to fund a startup business, for that you need to think systematically as per your business plan and goal.
What If a Business Owner Runs Out of Cash?
Many small business owners face a common issue, at some point in their entrepreneurial journey. Lack of cash flow is one of the primary reasons for small business failure. And it may be the leading cause of your business anguish.
Always stick to your existing plans and rather than closing the business, hold the business for a certain time. You can contact other business owners, or talk to your family, arrange to crowdfund, and consider taking small business loans. ‘Do it yourself’, if you’re a business owner you have to follow the basic rule of doing it yourself.
Always remember there are several ways you can get the cash flow for you to turn your dreams of owning a business into reality.
How Much Funds are Required Before Starting the Business?
According to the U.S. Small Business Administration, most small businesses would cost around $3,000, while most home-based franchises cost approximately $2,000 to $5,000 to start. But every business has its own needs and demands. Entrepreneur Drew Gerber, who started a technology startup company, estimates that a business owner needs at least six months’ worth of fixed costs on hand at startup. Recognize your customers before you open the door so you can have a way to start covering those expenses’.
When planning your business operation costs, don’t underrate the additional expenses, and remember they can rise as the business grows, Gerber said. It’s easy to overlook costs when you’re thinking to reach up to a certain height, but you should be more precise when planning for your fixed expenses.
Should You Hire a Fresher or an Experience holder? To Save Business Costs
It is true if you hire a fresher you might save costs, but a fresher cannot do the work, what an experienced employee can do. When it comes to work quality, people with experience can fulfill all your requirements. But there will not be any specific conclusion; in fact, it depends on the business requirements for the correct position in the startup.
The demands are different, so is the need!
Should You Hire For All Positions?
In startups, there has always been a limited fund available. It becomes important how you utilize the money for business growth. ‘Hiring people and building a team’ looks the same but are two different things. If you have a limited client and work, hiring more people may increase the financial load. On the other side, if you have an ample number of clients and work, then it is a good option to build and extend your team. This practice will help you to save time and also increase productivity. Therefore, choose the suitable option as per your business structure.
Building a startup is not an easy job, we should admire who starts a company. There has always been an expectation and goal set for every company. Running a startup may be difficult, but in the next phase, it is also extremely rewarding.
- Not sure where to start?
- Not sure whom to contact?
- Not sure how to get funds?
There are multiple sources and platforms where you can get money to run your business.
1. Create a Detailed Business Structure/Plan
Before getting into something, you need to have a clear understanding of how you plan to operate your business.
It has been observed that those companies that have a plan achieve higher growth rates.
First of all, it is important to raise money with a proper business plan. You can use a business plan template to get started.
Investors will see the financial status of the company before they even consider giving you a dime. Once you get into the chore of your day-to-day business operations, you’ll always have your plan as a reference to remind you how to proceed.
– Your business plan should have a clear description or reflect a clear detailing of your business.
- Who are you?
- What do you do?
– Make sure your projections are genuine.
It is not possible to turn a profit on your first day or even the first year and that is a normal culture in business.
Just try your best to precisely forecast your finances.
2. Get Startup Loan
When you approach a bank for the loan, dress professionally, and introduce all your business plans to the loan officer. Get in detail with all the interest, term loans, and external terms & conditions applicable.
A short term business loan is mostly applicable for running and starting a company. A startup loan is scientifically designed/modified to cover the startup costs of your new business. You can eventually use the funds towards expenses like supplies, working capital, furniture for office, as well as equipment purchases for your company.
Startup loans use two excellent sources naming Accion and the Small Business Administration.
Accion is a non-profit organization that gives people the financial help they need to improve their lives. And that includes small business startup loans! This is one of the few lenders that will give you funding before you’ve launched your endeavor.
Accion’s qualification, the requirements may vary depending on your current location. You should have no bankruptcies in the past year and no dues left.
SBA (Small Business Administration)
Typically, you need to be in business for 2+more years before you can qualify for an SBA loan. The Small Business Administration offers two specific options for potential entrepreneurs: a microloan program and Community Advantage Loans. To clarify, the SBA doesn’t make loans, they guarantee/assure them.
3. Business Credit Cards
Business credit cards can be an effective financing strategy if you use them as per the business plan. You can eventually purchase office supplies and other business expenses. In the following way, you’ll keep your cash flow available for expenses that you can’t pay with a card.
The advantage of a business credit card is the fraud protection they offer. Your business credit cards will be blocked/suspended if someone uses your card without your consent.
To qualify, you’ll need your consumer credit score to be 600 or above. Small business credit card issuers will also look and collect information at all of your sources of income to ensure you can pay your bills on time.
Starting a new business is always exciting, but not everyone has enough capital to run their startup. If you can not fund your business on your own try getting a loan or ask your family or friends for help.
You must always start with a strong business plan, with realistic financial projections. You also need to keep all your costs as low to make your funds last until you can get a steady income stream.
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Corefactors has seen struggles in maintaining leads for a business, tracking the team’s progress, and accessing reports in a conventional excel sheet. While all of this led to the inefficiency of the business functioning, it also added the difficulty of juggling between various platforms. Intending to shove away the roadblocks in the way of business sales, marketing, and communication, Corefactors understood the gap. That’s how Teleduce emerged into the business as an “ Integrated CRM to empower marketing, sales, and support teams with inbuilt cloud telephony.”