Have you finally decided it’s time to launch your own business? Is it time for your existing business to expand? Or, do you need to offset losses from economic downturns or the unexpected, like COVID-19?
1. Add An Additional Income Stream
Yeah. I know. You might be thinking that this is easier said than done. But, it is possible.One suggestion would be to live below your means. That’s just another way of saying not to spend more than you’re bringing. For example, if your take-home pay is $5,000, try to stay around $4,000. That extra grand can be invested into your business.
Your other option? Earn more money.
If you’re currently employed, then ask for a raise or work overtime. If you can manage it, start a side hustle until you’ve earned the money you need for your business.
- Buying cash-flowing assets, such as real estate or investing.
- Building assets, think creating an online course.
- Sharing or selling assets that you already own.
- “Reverse” passive income where you reduce spending.
2. Sell Personal Assets
An accessible way to raise money for your business is by selling some of your personal assets. Don’t be forced to part with anything that you don’t want to. But, you could try the Marie Kondo (Japanese organizing consultant) method and ask if certain items spark joy. If not, sell these items online or have a yard sale.That might not bring in a ton of money. So, if you need to raise more money, consider your expensive items. I know people who have sold their cars to raise money, and either bike or walk to work.
For longer commutes, they use public transportation or a ride-sharing service. In addition to making money from the sale of the car, they also don’t have to worry about recurring expenses like insurance, registration, gas, and maintenance.
3. Raid Your Savings
Another accessible way to fund your business is by withdrawing whatever you have in a savings account. I get that you worked hard to bolster your savings. But, it’s investing in your dream or passion. If you have confidence on your business, you can replenish your savings when your business takes off.4. Borrow Startup Capital from Friends and Family
Don’t have enough cash on hand to invest in your business yourself? No worries. Rather than bootstrapping, borrow the money you need from friends and family.From my personal experience, you might want to tread lightly here. Money has the ability to permanently fracture even the closets of relationships. However, this is still a tried and true tactic if you need a small amount of money.
- Prepare a business plan, financials, and other documents as if you were meeting with a lender from a bank.
- Ask for their feedback instead of just bluntly asking for money.
- Don’t take it personally if they decline. A lot of people live by the “I never lend money to friends or family” mantra.
5. Borrow from Your Credit Cards
Yes. Credit cards do come with exorbitant interest rates. As such, using your credit card can make it a challenge to pay off your debt leaving you in a vicious debt cycle.At the same time, credit cards aren’t all bad—especially when you need money for your business.
For one, they can be flexible. You can put as much or little as you want on your card. Secondly, you don’t have to fill out lengthy and time-consuming business loans. And, even though you’ll pay for it, you can take out cash advances if needed.
6. Borrow from Your Retirement Account
Do you have an employer-sponsored retirement account, such as a 401(k) or 403(b)? If yes, you should be able to borrow up to 50 percent of your balance or up to $50,000. It depends on whichever is lower.Since the money being lent to you is secured against your retirement funds, interest is low. In fact, this might just be your most affordable option. Just know that if you don’t pay the loan back on time, you’ll be penalized.
7. Take Out A Loan
You have several different options here, including:- Personal loans if you’re in need of a small amount of startup capital. After all, it’s uncommon for unsecured personal loans to go above six figures. Just be wary of higher interest rates.
- Peer-to-peer loans via Lending Club or Prosper allow you to work with individual investors instead of banks. If you have a decent credit score, you might be able to land a P2P loan that offers lower interest rates, fewer fees, and more flexibility.
- A conventional business loan can be either secured or unsecured. While they offer greater flexibility, these loans have higher interest rates, shorter terms, and lower loan caps.
- Micro-loans can be an alternative if you didn’t qualify for a traditional bank loan. However, they’re more common among non-profit organizations. Still, there aren’t many strings attached and you can expect medium to low-interest rates.
8. Incubators and Accelerators
If you’re a new and innovative company, you could work with an incubator or accelerator. Just know that there is a fine line between the two. Accelerators “accelerate” the growth of an existing company. On the other hand, incubators “incubate” disruptive ideas in order to build out a business model.But, what exactly do each of these accomplish?
9. Angel Investors
Like accelerators, angel investors will take an equity stake in your new business in exchange for capital. In addition to helping you get money to get your business off the ground, angel investors connect you with contacts and pass on their knowledge and experiences to you.10. Venture Capitalists
As with accelerators and angels, venture capitalists will provide capital to startups, early-stage, and emerging companies in exchange for the equity stakes of your business. It’s also common for venture capitalists to invest in fledgling companies that have proven to turn a profit in the past as well.11. Crowdfunding
Crowdfunding sites like Kickstarter, Indiegogo, EquityNet, and GoFundMe have become increasingly popular among entrepreneurs and innovators. And, for good reason. These sites allow you to test your idea while raising money through:- Rewards like the early release of a product, a special edition, or an exclusive discount.
- Investment crowdfunding campaigns. Here investors will get a slice of your company’s equity in exchange for their investment.
12. Product or Service Pre-sales
If you’re still in the early stages of your business, meaning that your product or service doesn’t exist yet, then this might be an idea worth exploring.To be honest, this can be intimidating. After all, you need to make sure that you’re offering something that your audience truly wants. Moreover, you need to meet strict deadlines if you want to keep your paying customers happy—you also don’t want them to demand a refund.
13. Strategic Partnerships
Do you have a strong relationship with a supplier, distributor, or customer who can benefit from your product or service? If so, why not ask them if they would want to get involved with your business.One idea would inquire if a loyal customer would want to become a silent partner. Or, you could start a founders program. A friend of mine told me about a company called Splash Wines. As a founder, you’ll be a lifetime member, five percent Splash Cash-back on every order, and other exclusive perks for $150/year.
14. Government Programs
Definitely don’t overlook government programs through agencies like the Small Business Administration. Securing an SBA loan comes with a number of benefits. These include low-interest rates and down payments, as well as favorable repayment terms and access to SBA resources.Just know that because of the paperwork involved, this process can move just as fast as a Banana Slug—which crawls at just 0.3 kilometers per hour. Strong business history and good credit standing are also required.
15. Contests and Competitions
To enter contests and competitions might seem like a stretch. But, you might actually win a monetary reward if you’re lucky the winner. Even if you don’t win, you’ll still get exposure, feedback from investors, and the networking opportunities can be invaluable.- Refine your pitch so that short, snappy, and concise.
- Know your audience. For example, if you aren’t in front of industry leaders, skip the jargon so that the audience understands what you’re saying.
- Apply as early as possible.
- Don’t be caught off guard. Be ready to answer common questions.
- Play to your own strengths so that you stand out from the contestants.
- Make the most of the contest by making plenty of connections.
