Starting a business may be intimidating because of all the upfront costs that come with it. It’s not exactly easy to start a business or keep it running if you don’t have the right funding. Every business has different funding needs and different costs of operation, which is why it is important to find the best funding option specific to you. There are several funding options, the most common being:
What is Self-Funding?
Self-funding, also known as bootstrapping, refers to using your own personal financial resources to fund your business. Self-funding may include using your own savings, collecting from partners or family, or even taking from retirement savings. Self-funding can both be beneficial and risky. It benefits in the sense that you avoid large debts right off the start. On the other hand, it may be risky to put all your personal money into business costs that don’t give back immediate revenue. With this in mind, you may need to keep a job outside of your developing business in order to provide for yourself and the start-up costs.
How Do I Get Funding Through Investors?
If you are looking into getting funds through investors, it is important to know how it works. Most investors give funds in return for partial ownership of the company. This means that investors look for businesses they see future success in so that they too will get a partial return.
1. Find an investor right for you: When finding an investor that is right for you it is important to know their background and what experience they have with start-ups. What businesses do they typically work with? What kind of investor are you looking for, individual investors or venture capital firms?
2. Share your business plan with your investor: Once you find an investor, share your business plan with them to see if you are a good fit for each other. It is important to find investors with an interest in your product and business operations.
3. Create terms for the investment: Work out the terms of the agreement. The terms and conditions should include what funds are going to be put forth and what partial ownership the investors may hold in return.
4. The investment: It’s time to get your investment. As your business matures, it also advances through investment rounds. The beginning investment or the seed round is where your start-up funds begin. Your funding may be continuous or vary depending on how you advance through the funding rounds.
How Do I Get Funding Through Loans?
Taking out a loan is another way to fund your start-up business. There are many types of loan options available for business start-ups.
Term Loans: These are the most common forms of loans. These are fixed loans set to be paid over a certain period of time. These loans are simple, but like most loans include interest on the principal amount.
SBA Loans: Small Business Administration programs are great options for businesses just starting out. There are different program options such as SBICs, SBIRs, and STTRs. These programs are a safe way to get funding for businesses new to the market. Learn more about each individual program to determine which is the best fit for you.
Microloans: These loans are relatively small, typically $50,000 or less. These loans are often from microlenders or nonprofit organizations. If you are able to obtain a microloan, it is a good way to get a small amount of money to boost your start-up.
Credit Cards: Credit cards or business lines of credit are good short-term financing options. This way you can take out payments and repay them quickly without building up large amounts of debt.
Which Funding Option is the Best for My Business?
Now that you know more about funding options for your start-up, it’s time to choose which is the best option for you. If you are able to fund your own business, while still providing for your daily needs, this option will help you avoid long-term debt. If you are a business looking for funds more quickly than self-funding can offer, taking out a loan may be a good choice. Investors may be a good option for businesses looking for longer-term funding. Starting a business may be intimidating, but with the right funding, you can launch your products and services without worrying about how you will pay for your next material costs or building expenses.
How Steelhead Technologies Got 2.2 Million in Funding
Steelhead Technologies is a plant management platform for process manufacturers. Steelhead Technologies more recently acquired funding through investors. They were provided with 2.2 million in a seed funding round by investors such as TIA Ventures and C2 Ventures, among a few others. TIA Ventures and C2 Ventures are examples of venture capital firms that have specific business interests such as the operations behind Steelhead Technologies. With this funding from the investors, Steelhead Technologies is now able to expand its sales and marketing, develop its technology, and expand its team. Read the press release to learn more about Steelhead Technologies’ background and their funding support. You too can find investors or other funding options that will give your business the financial boost it needs.