Thinking Outside the Box to Secure Business Funding

When you start your own business, you don't always have to hand over your life savings to finance your dream. Instead, think outside of the box to secure your funding. Here are five ideas for how to do it.

1. Enlist a Venture Capitalist

If you're willing to hand over the reins of company ownership to an outside organization, then the support of a venture capitalist could come in handy for your fledgling business. Typically, you give a percentage of the company in exchange for the capital you need to get your operation off the ground.

This is a great option for startups, especially ones that have strong teams and great potential to bring in revenue — that's what venture capitalists look for in their investments. Plus, some will even provide guidance that can help take the business to the next level, benefitting you both.

2. Find an Angel Investor

An angel investor is similar to a venture capitalist, but they differ in one big way — while the latter tend to be companies or groups of people looking to invest and make money, the former is a single person. As such, they typically feel more willing to invest in a company that has potential, even if it will take a little longer to bring in dividends.

To nab an angel investor, you'll give a similar pitch as you would to a venture capitalist, but you should focus more on the human interest aspect of your business. How might your idea change lives? If they feel drawn to give you money, they will — and they'll typically get involved in guiding the business forward in some way since they have an emotional tie to its mission.

3. Crowdfund Your Startup

Another out-of-the-box option could be a crowdfunding site, wherein the general public donates the cash you need to start your company. This typically comes with a caveat, though — to secure their donation, you have to promise that, when the product or service rolls out, investors get first dibs. As such, you have to be ready to turn your idea into a reality as soon as you reach your donation goal. If you need the funds to develop and spend more time fine-tuning your offering, then it might not be the right method for you.

4. Factoring

This option will serve your business if it involves invoices and payments. When you send a bill to your clients, you have to wait for them to send it back with their check or money. Sometimes they have weeks-long windows to do so, and that's not counting late payments.

With a factoring agreement, you send your mailed invoices to a service provider, who gives you the money your clients have yet to submit. Once you receive it, you send it to the service provider to pay off your loan. This is a much less permanent option than the previous three, but it's also a great way to keep your small business afloat when you first start with the cash you need to get by.

5. Applying for a Loan

If nontraditional options fail, you always have the choice of a small-business loan. To apply, you have to have a few details ironed out. For starters, you should know how much money you need, as well as the business plan that will guide your usage of the loaned funds. A bank will want to see how you will spend their money before they dole it out.

Along with those two details, you should also present your own financial information to show you're a trustworthy client. Then, it'll be up to the bank to decide if it wants to work with you and how much money it will give you to get going.

Think Outside the Box

These are only five examples of how you can fund your business. Start brainstorming and see where you can get the money you need to make your dream come true — with so many options, the answer is out there.