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Having a great business idea is the most important first step on the road to success, however, without a way to finance this idea of yours, any idea you may have is doomed to failure. One of the first tips you would come up with when deciding to get a bank loan is to sell an asset or get a mortgage on it. Unfortunately, home-ownership with millennials is quite low. This can pose a problem not just with selling but also with getting a collateral when applying for a loan. Needless to say, this also means that young entrepreneurs have a limited number of options. Nevertheless, there’s more than plenty to choose from. Here are four such methods that young entrepreneurs should use to finance their business ideas in 2018.
Find a partner
By teaming up, you may not solve all of your financial problems but you will definitely (drastically) reduce them. Aside from this, you also get some additional benefits to the table. For instance, you don’t only get someone to share the costs with but also responsibilities and administrative tasks. Sometimes, you just can’t do everything on your own and some tasks are too serious to be entrusted to an employee, a co-owner, however, is a different story altogether. In certain situations, this partner brings more than just money to the table. They might bring experience or their own network of contacts.
Unfortunately, this method also has a dark side. Finding someone who shares your interests is easy but finding someone who shares your dreams, vision and corporate values are something completely different. Just imagine a scenario where you are a co-owner in a company where your partner doesn’t care about the environment as much as you do. How hard will it be to decide on the cost-effectiveness of eco-friendly practices? For this reason and many others, make sure to screen your potential partners as thoroughly as you can. Aside from this, you should have everyone sign a shareholders’ agreement.
Get a loan
In a situation where you do have a collateral and plan to get a loan, either way, you need to ensure that you’re getting your money’s worth, which is not nearly as simple as you may assume. How hard can this be, you’re probably asking yourself by now. After all, don’t millions of people get loans every day? Well, of course, they do but what kind of loans. If you don’t care about your interest rate and other features of a loan then, by all means, you can get a loan this very day from any random online lender and be done with this.
However, if you aim to get the most out of this deal, you should probably consult a professional and ask for their opinion. Due to the fact that both mortgage and real estate function differently in different parts of the country, what you need are local mortgage veterans. For instance, if your future business is situated in NSW, what you need to do is look for loan specialists in Sydney, instead of looking for them in another state.
When looking for business loans 365 Credit can be of great help. It is essential to think about your business carefully before applying for one. While it can be tempting to use for whatever it is that catches your eye; it is also crucial to consider your business needs when applying for the loan.
For example, if you want a large loan to grow your business, you should ask for smaller loans, rather than big loans. Larger loans are usually required to grow the business, but smaller loans help the business grow at a comfortable pace. This means that in a situation where you have to borrow from a lender, it is better to ask for a smaller loan than a larger loan since you do not need to spend that much money upfront. Since smaller loans are often more flexible, you will have less debt and higher paying customers.
Crowdfunding is a thing
If you aim to create a tech-oriented startup, crowdfunding is probably the first thing you should try out. Here, you can give your audience a chance to witness your genius first-hand and help you make this dream come true. What you need to do to get there is pick the right platform and find a way to make your idea appeal to them. As for the platform, Kickstarter may be the industry flagship, however, GoFundMe, YouCaring or Crowdfunder can be equally as effective.
Speaking of presentation, why should people care about what your idea can do for you? Why should a random stranger online care about your dream come true or your one chance at success? Instead, you need to focus on the way in which your product/services will be of use to them. Try to explain how they stand to benefit from financing your company and this crowdfunding campaign might be enough, on its own, to fund your business.
Borrowing from friends and family
Finally, this is a technique that a lot of young entrepreneurs resort to, even though, in some aspects, it’s clearly less than ideal. First of all, just because someone is family doesn’t mean that they’re about to just give you the money you need. When presenting your business plan, you need to start with the same persuasion techniques you would normally use on an investor.
Even if you succeed in getting the funds you need, you should seriously think about the ramifications of failing in your business effort. Look at it this way, just because you borrowed money from someone close and your business idea failed doesn’t mean that you don’t have to pay the money back or that you don’t have to do it as fast. In fact, this is the safest way to compromise your personal relationship with that person.
At the end of the day, each of these methods is less than ideal. In one case, you’re at the mercy of strangers, while in another you risk the losing trust of those you care about. With a loan, you risk losing a personal asset, while by teaming-up you risk the future of your entire company. Still, each of the above-listed has some advantages, as well and, if you want to start your own enterprise, there’s really no way around them. He who dares wins!