So you want to start a business. Maybe you’ve stumbled on a great idea that could be the next big app, maybe your side hustle is starting to take shape into a lucrative small business, or maybe you’re following your childhood dream of being an entrepreneur. No matter where you are in your entrepreneurial journey, startup funding is key to get your from idea to incorporated.
The idea of funding a startup idea may seem daunting at first. We all approach entrepreneurship from different financial backgrounds, but like any endeavor, there are tried and true methods that will help you successfully get your business off the ground. In this blog, we’ll not only cover startup funding for small business but we’ll answer common questions around startup funding.
One of the most commons questions asked is, well, the most obvious: How do I get funding for a startup company? There are many ways to go about getting funding for startups, but before your start seeking investors, it’s vital that you have all of your homework done first.
Be Prepared with Your Business Plan
Before you get to the funding stage of your business, make sure that you have your business plan completed. Having an in-depth plan will improve your chances of getting investments for your business. Knowing how your business will operate and how you intend to grow that business will not only help you as an entrepreneur, but will appeal to potential investors because they’ll know where their money is going.
Your business plan should provide a clear description of your business. It should be able to easily define who you are as a company and what service you provide. Having a market analysis is also beneficial as it will cover information about potential competitors and the market you intend to target. Beyond who you are and what you do, you should also include a clear description of the organization of your company. This organizational structure will define roles for management and other positions as needed. Finally, the most important part of your business plan will be the financial projections.
Including financial projections not only helps you as a business owner, but it provides potential investors with a road map as to where their funds will go. For some investors, being able to anticipate how their money will be utilized and how the business will be grown, will help solidify their investment.
The Money Talk
Once you have your business plan locked in, it’s time to start thinking about acquiring funding for your company. As stated, there are many ways you can acquire funds you need. Let’s break it down:
The most common way to kick start your business is by bootstrapping -- or using your own funds. Personal savings, credit cards, or the mortgage on your home are all sources of funding, and you can use these resources to get your company off the ground. Make sure you’re up to date on your credit health, and know where you are financially so you can qualify for and attain loans if needed.
Small Business Loans
Getting a loan from your bank specifically to start a small business is a common way to get funding, although it can be difficult to qualify. There are also alternative options like independent lending companies that may offer funding, they can be predatory to entrepreneurs. Make sure you do all your research and seek a loan from a financial institution you trust.
Sometimes the source is closer than you expect. While reaching out to friends and family for funding can have its risks, your personal network is also a great way to secure seed money. Be sure to clarify how the money will be used and any involvement your friend or family member might have in regards to the business before your accept the funding.
In the age of the Internet, crowdfunding has been a go-to source for entrepreneurs to gain funding. Crowdfunding websites like Kickstarter and Indiegogo provide platforms for businesses to communicate their message to a wide audience and connect with interested investors. The process is simple and there are tons of resources on how to set up your crowdfunding campaign. Now with social media and the ability for rapid sharing across the Web, your business pitch has the ability to reach across a wide market.
Grants are a great way to secure the funding you need. You’ll have to undergo the grant application process which can be arduous, but grants offer a solid resource for funding. Look to your local Small Business Administration chapter to see if there are any grants available for start ups. There are sometimes grants available especially for minorities, veterans, and women.
Startup funding takes many forms from loans, grants, and savings. Be careful with how you use the funds regardless of the source. While startup funding is just one of the many aspects of starting your business, it is one of the most important.
If you have any questions about incorporating your new startup in Delaware, visit Delaware Business Incorporators, Inc. or call us at 1-800-423-2993 or 302-996-5819.