Times are tough. The economy is growing, albeit weakly, but finding investors to help you get a new business up and running is almost as difficult now as it was following the bursting of the housing bubble and the recession that followed.
The bright light in this gloomy economy is that there are more ways now to raise money than ever before. Going to a bank for a small business loan is still an option, but now, it isn’t the only one. In addition to more traditional financial institutions that have established themselves online, the internet has created several new innovations to get the funding you need.
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Of course, some things never change and you will have to still sell your idea to your investors. Crafting a viable business plan, creating a cost analysis that is accurate and selling your idea will remain similar if not the same. If you have a great concept for a new business startup, get your papers together and look at different ways to get the money for your startup:
- Crowdfunding. It seems like you can’t go online these days without hearing about another business starting up through crowdsourced funding. For entrepreneurs with an innovative idea and a solid business plan, asking perfect strangers for help can be a viable method of raising money for a startup. Picking the best crowdfunding source for your business can make or break the deal, however. Choose an established crowdfunding source with a solid history that meets your needs.
- Online networking. Many traditional investment companies have found a second home online. These include companies looking for new products and startups that they can invest in. The risk with these companies is losing control of your business or being absorbed into a larger corporation if your product or service takes off and becomes a financial winner. To avoid this, ensure that any contracts you agree to ensure the independence of your company. This can be limiting while you are getting started, but if your idea is a money maker, it will benefit you in the long run.
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- Online business loans. Even if you personally have bad credit, small business loans are available online. The recent recession has left nearly everyone’s credit a little worse for wear and banks are still gun shy about loaning money for small business startups. If your credit isn’t perfect, getting money from a bank can be as difficult as pulling teeth. There are online resources to help you find the best lender for your situation.
- Banks and traditional lenders. Even if your credit or idea doesn’t have the strength to get a loan from a bank, the process you go through will give you valuable experience and insight into what lenders expect from entrepreneurs. Submitting a business plan to a bank can give you insight into the application process that can be used while networking or applying for a loan through other means.
Trying different routes to get your startup money can save you valuable time. A business plan created for a bank is identical to what you will need to show investment partners or a loan company. By pursuing multiple paths, you can save time and effort.
Starting a business in a weak economy has enough frustrations that getting the money to start it right shouldn’t be one of them. Taking the traditional route of getting the startup money from a bank can be the death knell of even the best idea if your credit is not perfect. Taking your search for funding online can open a number of different avenues to explore and try.