These are the 10 best ways to finance your business

Finding the funding we need for our business has never been a simple task. Much less is it now, in an economy that presents a very poor growth and a stagnation of consumption rather than prolonged. Framed in a context of global crisis, setting up a business and even more finding the necessary financing to carry it out, it is presented as an almost titanic task, with many uncertainties and very few certainties.

This does not mean that there is no way to find the financing that we will need. In fact, the instruments are there, only that we can find the one that best suits our needs and address it in the right way.

If we made a ranking of those instruments, ordered according to the possibilities that they will finally finance us, we would find ourselves in a scenario very similar to the one described below.

finance your business
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10. Ask the bank for a loan

One of the idiosyncrasies of the business fabric, unlike other countries such as the United Kingdom, is the high dependence on the business of banking system. Going to the bank to ask for a loan has become for years the norm for more than 80% of small businesses, compared to just under 50% that register their credit requests in other countries.

In spite of this and facing the difficulty that many businesses currently have to finance themselves in this way, we can go to our “friendly banking entity” if our business idea moves in a traditional terrain (commerce, restoration, services, etc.).

9. Exchange of services

The exchange of service or bartering  involves reaching agreements with other companies in a relationship in which everyone theoretically wins. Although it is not a direct financing method, it is true that it helps reduce fixed costs and can sometimes represent a very important saving for companies that embark on a relationship of this type.

On the negative side, dependency relationships are created and there is always the risk that one of the parties does not comply in the same way as the other party’s “part of the deal”, a situation that can lead to unwanted conflicts.

8. Negotiate an advance

If we are lucky enough to find an important client even before launching our product, we can negotiate with it an advance that allows us to finance the launch.

Count on clients that count on us for our image, the trust they have in us, the quality we have demonstrated on previous occasions, etc. is key so that some of the best can remain as customers for a long time, but can become a recurring way of financing our activities.

7. Startup incubators and accelerators

If our business model is comparable to a startup philosophy (intensive use of technology, scalable, etc.) it is likely that the place where we are most interested in being in the first place is in an incubator or a business accelerator.

In the first, they will help us to shape our business idea in a reality and in the second, we will have mentoring and probably external financing  to be able to attack the market with certain guarantees.

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6. Present the project to venture capital companies

If our company can demonstrate that it is scalable and that it can generate profits in the short-medium term, it can be interesting to start knocking on the door of certain venture capital funds.

The positive part of doing it is that in reality, they are companies that are used to risk and lose the investment because in reality they know that if one of their bets goes well, the benefit they will get in return will be enormous. The downside is that many venture capital companies are more concerned about the benefit they can get from the sale or divestment of a company than the company itself, sometimes forcing the founders to make decisions that do not really want drink.

finance your business
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5. Present the project to a local Business Angel

Presenting our project to a  local business angel  is very similar to doing it in front of a venture capital company. The main difference is that theoretically the angel investor has a social commitment to the community in which it is located. They are usually successful entrepreneurs or investors seeking the development of entrepreneurs who are within their area of ​​influence.

4. A crowdfunding campaign begins

The equity crowdfunding can become a great alternative when financing our company. It allows any small investor to bet on our company, backed by transparency and generally quality of this type of platform.

3. Aid and subsidies

Although public administrations do not usually finance business projects directly, they do implement various grants and aids that allow the financing (even if a posterior) of projects that meet certain requirements. They are usually benefited by this type of subsidies innovative projects, betting on new technologies, which want to internationalize or represent a competitive advantage in any of the areas that the administration wants to promote at a certain time (such as renewable energy a few years ago).

2. Friends and family

Resorting to family and friends has become one of the first options considered by all those who want to embark on the business adventure. Those known as “Friends an Family” can offer us the initial impetus we need to start our project.

1. Bootstrapping

Bootstrapping is a term that refers to starting something with no resources or with very few resources. In the area of ​​business, then, means to exercise some entrepreneurial activity with little or no capital, i.e. undertake only with the means that are within reach.

One of the biggest advantages of  Bootstrapping  is the  risk, almost zero, since we will not owe anything to anyone and if we fail, we will not have lost too much, we can always try again.

Although it is a slow way   to start, it may be the only way for many entrepreneurs. Emphasize that if you are successful you can get an invaluable experience,  of great value that will often affect the services, products offered and  work capacity.

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