Being the little guy in business is never easy.
Whether you´re a one-man operation or a small start-up, the need to think outside the box is vital. Without it, any true measure of growth and sustainability will be hard to achieve.
Here are seven ways that small businesses can take their business to the next level.
Self-Funding
Bootstrapping from the ground up by selling assets like a second home or taking out mortgages and credit cards is a risky endeavor but is very common in the start-up scene.
A popular email newsletter, theSkimm, was founded by this method.
Friends and Family
Going to friends or family to borrow money may seem like an easy option, with many anticipating a casual interest-free loan and flexible payback period. However, if the business doesn´t work out, the loss can damage the relationship.
Make sure they know the risks. It’s also a wise move to have a contract that confirms they don´t have equity or voting rights.
Crowdfunding
Crowdfunding is a great way to gather funds by promoting your idea on sites like Kickstarter to get public donations. Typically, most campaigns will offer incentives, such as free products or merchandise.
Small businesses should consider these potential costs when starting a crowdfunding campaign. One of the biggest advantages of crowdfunding is that you stir up interest, effectively gaining investors and customers at the same time.
Personal Loans
Unlike business loans, which come with restrictive terms, personal loans give small businesses more flexibility. Lenders will consider the individual´s income and credit history and don´t usually ask for collateral. As a result, this is a solid option for small businesses to get up and running.
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Partners
Sometimes, taking on a partner is a great way to get funding. Successful partnerships can benefit from aligning their resources, with new players providing a skill set that the founder doesn´t already possess.
However, entrepreneurs should consider partnerships carefully, making sure they share the same vision.
Venture Capital
Venture capital firms invest other people´s money into new small businesses. However, while they have a lot of capital, and are prepared to take risks, they are only interested in investments where they predict a high ROI.
To get funding from venture capitalists, small businesses must prove they have a worthy investment with a promising strategy.
Angel Investors
Small businesses can look to find angel investors online if all other avenues appear bleak. Unlike venture capitalists, angel investors invest their own money. These wealthy individuals can be part of a firm or simply a lone ranger willing to take a chance on new early-stage small businesses.
The one common thing between angel investors is that they do expect high returns, similar to VC firms.
The Road to Success is Rarely Easy
For many entrepreneurs, borrowing money is the only way to get their business off the ground. It certainly isn´t the easiest road, but then success rarely comes without struggle.
If they are able to fund a start-up from their personal savings, or with the support of family, it can save them a lot of debt.
However, bigger ambitions may require bigger investments. For that, a smart strategy is crucial.
