Ways To Fund Your Small Business Startup

With no funding, small business owners are destined to fail. Growth and expansion, much like startup requires more capital. If this is something you are lacking, you will have to figure out ways to fund your small business in order to avoid having to close your doors. Coming up with a  plan to fund your small business can be difficult, but it is a crucial step to any new or existing business. It is a step that must be done to ensure success.

Here are 10 ways to fund your small business startup:

Use small business lenders – Sometimes all it takes is a simple search on Google to find many possible solutions as to who can fund your small business. However keep in mind that a majority of these small business lenders only offer high interest loans against your assets. Because you are borrowing money on short term you may in fact be paying a lot more over a period of year than you would even if you used your personal credit cards.

Good old bank loans – As a new business this is a good way to get started funding your small business. However it can be difficult to secure if there is no proven track record from the business owner. The banks may also ask for your assets to secure loans. Loans from a bank are paid back with interest in the set time period. Ensuring that the repayment time is adequate is important.

The Canadian government – Another viable option for securing funding for your small business startup is the Canadian government. There are hundreds of government grants, government loan and financial assistance programs. Be sure to see some in our Funding Database.

Bootstrapping – This is the process of the business funding itself – as more money comes in, the funds are put directly into further growth. Once a business thoroughly looks at their books, they may find that their revenue from sales is enough to grow their company over time without the need to lend money.

Family and Friends – Securing a loan from family and friends can be a solution to some businesses. They can provide both equity and debt funding. There are advantages to getting money this way as they will not likely impose on your business. Caution should be taken when selling a part of the business in order to get the capital as new companies can fail leading to possible loss of close relationships. Possible investors should be fully aware of the risks involved.

Self-funding – The owner of the business may be in a position to fund the company’s growth themselves. Offloading assets such as boats or a second home can be a good way to generate the capital needed. The owner can also choose to take out a personal loan through their credit card or by taking out a second mortgage.

Angel investors – Increasingly, there are more angel investors that are looking to buy into new businesses. Investors such as these often form investment groups in order to spread the risk as well as gather their research better. A local chamber of commerce can be an excellent way to find these groups or individuals that would be interested in making an investment.

Partnerships – Taking on partners is another alternative. They would not necessarily become a working member of the company if they are just bringing the additional capital needed. The company can greatly benefit from aligning resources with a strategic partner. Partners can also be established with other businesses that could benefit from your company over the long term, such as a property management group with a property maintenance business.

Crowdfunding – Crowdfunding uses a website where a person is able to pitch their idea and have thousands of people invest with usually small amounts of money. With the many different websites that offer this service, proper research should be done before venturing forward with this plan.

Venture capital – The final option that owners of new businesses have is venture capital. Firms would invest into a company at the early stages of its growth. However, you can expect the firms to require a large stake as they normally invest large sums of money. This usually puts the owner in a position of not owning the majority share in their company.

Once you have the right business idea, finding funding is not too difficult if you have the right resources. Consider becoming a member of Canada Startups and using our Small Business Startup Portal in order to help you along the way with out Startup Guide and Timeline, Business Plan Builder and the ultimate Funding Database.