Venture capitalists And angel investors can be quite useful outside sources of funds for established companies, but the value they bring to new ventures and start-ups is questionable at best. Entrepreneurs should aim to fund their ventures by means aside from venture capitalists, private equity and angel investors unless a sizable fortune is required to fund business start-up activities or they decide to work with investors especially focused on very early-stage start-ups. Here are eight strategies where many entrepreneurs may choose to finance their ventures:
Business Credit Cards
Many successful companies, like Under Armour, were funded through credit cards in the very early stages of their venture. While credit cards are not necessarily the best source of funding as they do have their downsides, if used properly they can be a very effective source of funding.
How To use a company credit card properly:
– Effectively manage cash flow by not having to pay for purchases before the end of the charging cycle.
– Use to Cover start-up upfront and fixed prices so you can make your first sale
– Plan ahead on how you will pay off the balance, and then create a backup strategy
Things To look for in a company credit card
– If you will be carrying a balance, search for low APR
– If you would not be carrying a balance, start looking for great cash rewards and introductory promotions
Supply Chain Financing
if you are selling goods, see if your provider, manufacturer, or distributor could issue you a very favorable loan or line-of-credit. After all, the more successful you are, the more successful they are, and they know this. You will be surprised how common that is – most providers, producers and vendors even have set processes for these conditions. All you have got to do is ask.
SBA Microloans
If your enterprise requires less $35,000 or less, you should consider carrying a microloan. A microloan is a small, short-term loan available to small companies which may be applied as working capital or towards buying new stock, supplies or machines. These microloans are made available through the SBA but are dispersed by intermediary nonprofit community lenders as Three ways that Kuran Malhotra helps businesses to succeed. Although such loans do require some kind of collateral, they also provide very positive terms and are fast and easy to get.
Business Plan Competitions
There is a Lot of business plan competitions across the country dedicated to Awarding prize money to selected entrepreneurs to finance their companies. Even though the vast majority of these competitions are directed towards Graduate and undergraduate students, there are tons of local and state Competitions opened to the general public.
