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7 Small Business Startup Financing Strategies

Startup-Financing-Strategies

Find the Financing You Need For Your Startup

The success or failure of any business venture, including a startup, depends on the level of capital that you have at the beginning of that venture. Small businesses contribute almost $8 billion annually to the American economy, which means there is plenty of opportunity to be had with a startup. The issue is that within 7 years, nearly 70% of all startups will be out of business. The average capital for a startup? Right around $70,000 per business. Many site a lack of money as the reason why they went out of business.

Your startup needs capital to survive. Here are some ways you can find the extra capital you may need to help your business thrive instead of fail:

Outlets for Gathering Capital

Government grants:
The best part about getting a government grant is that you’re getting money that doesn’t have to be paid back. There are 11 Federal agencies that offer grants to small businesses every year, but these grants are often difficult to obtain. Progress is often required of a business that receives a grant, which can mean tight deadlines. Penalties may be levied if you are unable to achieve the goals you outlined in your grant proposal. Without a well-developed business plan, you won’t get a government grant.

Crowdfunding:
Why not see if your ideas are valuable before you start your business? With crowdfunding, you have access to a micro-investment platform that allows you access to a potential $5 billion market this year alone. Projects and startups that have true value to society are going to be funded fully with the capital they need. If you don’t get the funding, then you don’t have a good idea and it’s time to go back to the drawing board.

Social lending:
Social lending is the modern version of getting loans from your family and friends, but on steroids. You can have anyone loan you money through social networking, but the terms of the loan dictate that every month your money your agreed upon payments are withdrawn automatically from your account and distributed to your lenders. If you know that your idea is going to pay off, this might be the easiest way to finance a startup without needing to use your own money.

Customer financing:
Do you offer an incredible service, but you don’t have the money to really make it into a legitimate business? If your customers love what you do, they may be willing to help finance you if you give them something in return. It could be a discount on services rendered, free products, or even a pay-for-performance contract that encourages them to get you the money you need. The best part about customer financing is that if you’ve got just one happy customer who helps to finance you, they’ll encourage other customers to do the same because of their amazing experience.

The capital for startups is critical to their success, but so is your ability to manage that funding appropriately. If you don’t have the right amount of money or you don’t spend your money wisely, you’ll just become another out-of-business statistic. To solve your funding issues, consider these ideas today so that you can have the right amount of capital for a successful startup.

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