If you are an aspiring entrepreneur, launching your startup will be everything you have ever dreamed of. You may look to Silicon Valley for inspiration, where hyped tech startups have investors vying to get their money in the stocks. If the startup you hope to launch is not a tech one, you may experience the opposite, where investors run away from your company. Technology is a booming industry; therefore everyone prefers to invest there.
Now, if your startup idea covers an industry that is not so sexy, like agriculture or the arts, you will most certainly experience trouble finding capital. Don’t be discouraged right away.
Read on to find out how you can fund a non-tech startup:
1. Create a Killer Business Plan.
Your business plan is extremely important to pitch your business idea to potential investors or lenders, like a bank. So, get ready to spend generous amounts of time and effort to develop this business plan for your startup. You might have to do extra research to convince potential lenders that your business idea is highly lucrative and that there is customer demand even if the industry overall is not expanding crazily.
Get support from your peers, veteran businesspeople and the local commerce support groups. Polish your business plan with their feedback to improve your chances of getting approval for a traditional business loan.
2. Find Important Supporters in the Industry.
If your startup involves an obscure or a neglected industry, you can find professionals or reputed businesspeople in that industry to back your business plan. With experts at your side, your idea will seem more credible and viable to investors and lenders.
3. Crowdsource Online.
In case bank loans fail or you cannot find any investors to finance your startup, go online. Crowdsourcing platforms like Kickstarter are perfect to find people who might donate for your cause, or might invest small scale in your idea. You can essentially find thousands of people to fund your idea on the web. All you need will be a well-written and short business plan to appeal to the masses.
4. Reduce Personal Debt.
If you have massive amounts of personal debt incurred by student, housing and car loans, then you may become unappealing to banks and lenders. Debt will lower your credit score, which could make you ineligible for a business loan. Your investors could believe that you want a business loan to pay off personal debts.
Therefore, if you do have high debts, immediately take steps to reduce it. Consider tactics like federal student loan consolidation or debt settlement, if the amount due is too high. Also, if you can eliminate debt from your life, you will have more funds at hand that you can use towards launching your startup.
5. Seek Non-Traditional Sources of Funding.
Funding is not limited to banks, investors and online do-gooders. Don’t overlook unconventional methods to fund your startup. First, you can ask friends and family to lend you some cash interest free. Also, you can seek local credit unions, which are better than banks, for loans, which usually come with lower interest rates. You can sell old stuff around the house or freelance exclusively to finance your startup. You can cash out a life insurance policy. These sources of funding may not be unconventional in most instances, but startups rarely think to consider these venues in addition to the others mentioned above.
Yes, starting a startup is challenging, especially if it’s of the non-tech variety. As long as you teach yourself to think outside the box when it comes to funding your business, you will be able to find the capital you need. Carefully consider the suggestions listed above, and also research how other startups similar to yours are finding their capital.