You want to start a business, so you’ll need to get funding. But how do you fund a startup?
If you are like most product or app entrepreneurs-to-be, you are passionate about your business idea. You will stop at nothing to see the world change with your vision. Your conviction convinces others to believe and invest.
As invention investors, IdeaPros specializes in guiding entrepreneurs with great ideas through the complexity and dangers of startups. From launching products or apps, to cash buyouts and selling orders, IdeaPros would like to share the most effective methods to funding a startup business like yours.
The fastest and most direct way to get cash for your business idea is with your own money. Such as your personal savings at the bank, or investments that can make a greater return from your enterprise. Entrepreneurship is not a safe game, and putting some of your own skin in the game could motivate you to become what they call entrepreneurs in the dictionary, a “risk-taker.”
Using personal funds means you don’t have to pay anyone back, but if your business fails, you will, of course, lose your money. A serious entrepreneur still will not give that a second thought. What the successful entrepreneur keeps in mind is the leverage of time and investment in themselves and the team they have around them.
Debt is a tool for the wealthy, and they use to make more money, while consumers use their plastic and sometimes get into trouble. Millionaires & Billionaires often rise by having access to OPM, “other people’s money.”
Two advantages of using credit cards to finance a business are: 1. they give you revolving credit that you don’t need to reapply for and 2. you don’t have to give up equity. In some cases, even pay back with interest. You can sometimes get reward points from your credit card as another perk, and you don’t need collateral. It’s easy to track your expenses with a credit card, remembering to submit everything to your bookkeeper.
Use yours a family member of a friends home equity to finance the startup; this is a perfect example of investing in yourself. Family and friends can help here too. It is often the quickest way to finance a new business, and the interest rates are often much lower than credit cards and high-interest loans.
You can often withdraw money from a retirement account by taxable distribution, borrowing against your retirement savings or using a rollover. Once you invest retirement funds in your business, you may not have to repay them to your retirement account, make sure to check with your accountant. As a result, there is no principal, interest, or a credit check needed.
Many people use money from friends or family to help in startup funding. Family and friends are often more flexible with how repayment will work, and they are willing to make a personal loan with friendlier terms than a traditional loan. These supporters are more likely to be idea investors especially if you can show them how much research and thought you have put into your business planning.
A more traditional and common way of business funding is a personal loan from a bank. This type of loan doesn’t require a business with its own credit score; it will require that you have good credit and the means to pay the loan back. By borrowing from a bank, you will not be using your personal savings or funds, but you will need to make payments on the principal and interest going forward.
Successful businesses have invention investors, app or product investors identified through partnerships, ideally through an existing network or online communities such as LinkedIn, Meetup or other investor communities. Investors in apps, products or inventions invest a sizeable sum of capital usually for equity, royalties or some kind of preferred return to get their money back. They want an interest in you and your company, and sometimes they want decision-making power.
You want to fund your business, and there are many options if you commit to seeing through the decision of your dreams. You are closer than you think.
IdeaPros is a Super Venture Partner™, guiding entrepreneurs with great ideas through the complexities and pitfalls of the startup world. Set on elevating the success rate of new innovative products and apps, our team leverages their collective experience to create demand among consumers and maximize upside potential for our partners.