A Beginner’s Guide to Getting Business Funding in 2021

A Beginner’s Guide to Getting Business Funding in 2021

Was your business one in many that had to face loss in 2020 and you are searching for the opportunity to get your business back on track? Or waiting for the perfect moment to get funded and launch your new business? While the future may look unfavorable the decision of coming out stronger depends on you! 

Business owners should consider a sensible option of getting their business funded. Here are several different funding options that may be suitable for your business in 2021: 

The First Thought of Self-Funding/Bootstrapping

In bootstrapping, a business owner is mostly reliant on themself for running/starting the business. The initial stage of bootstrapping involves spending personal savings either by making use of a credit card with a low/no interest rate or can use lines of credit on home/personal property. Entrepreneurs should only consider this option after keeping medical emergency savings aside. 

The next advanced step to keep depending on bootstrapping funding is through money coming from customers. Basically the sales growth help in financing the business. 

Wrap your Head Around Venture Capital   

Getting funded by venture capitalists(VCs) is not the same as other ways of funding. VCs will expect some active role in your business which is the main downside for many business owners. Nevertheless, venture capital is increasingly becoming a popular source for raising business funding, especially if entrepreneurs prefer not to take bank loans or lack self-funding. 

Venture capitalists might also raise funding before your business has begun operations or started earning profit. VCs are ready to invest in a firm with high-risk as well as high-return. 

VCs just don’t invest in innovative ideas instead they will invest in potentially growing business. Hence, while pitching to venture capitalists business owners should be prepared for the process of due diligence

Nothing Wrong With Asking For Help

 In the world of business, the family/friends funding method is often considered by many entrepreneurs. Business owners are sometimes afraid and shy about asking for help from their family and friends as this step is majorly dependent on relations and emotions of the close people around. 

Entrepreneurs can proceed with this option once they have sorted all the possible circumstances of returning the money or else wise. 

It is an easy way of funding in terms of paperwork, as documentation or formalities are not much involved. 

The Tradition Way: Bank Loans

Before applying for a Bank Loan, a business owner should know that bank loans can take anywhere from a few weeks to a few months for processing because it involves a major share of documentation and formalities. Entrepreneurs sometimes pass on the option of a bank loan because usually, interest costs need to be paid which results in a burden on the current operating costs of a business. 

Additionally, a small business owner might be required to put down his/her personal assets on the line in the form of a guarantee. In such risk-taking scenarios, you should not think twice about approaching a financial advisor. 

A financial accountant could professionally analyze and measure risk tolerance and ultimately help in risk management.

Explore the Trendy Way: Crowd Funding 

In crowdfunding a business raise funding via crowdfunding platforms/websites and social media. Crowdfunding is a strange way of raising capital because there will be numerous individuals giving small amounts of donations and the majority of people will be non-investors in the profession. 

People donating neither will get ownership share nor financial return. These people mostly get to participate in the launch of a new product or sometimes receive a gift of your product/service.  

However, applying for crowdfunding is very competitive because crowdfunding enhances a business to avoid the cash flow pressures of having to repay debts or share important positions with investors. 

Look at the Possibility of Angel Investors 

Angel investors are rich and wealthy people who adequately spot the potential growing business and according make the decision to lend funding or not. Angel investors often ask for a partnership or a very senior position in the office board.

These investors are called “Angel” investors because they provide valuable input to the funded business with their many years of experience in the business environment.  

Many businesses pitching angel investors already have some revenue flowing in, but they need some money to kick the sales up or to deal with temporary loss. 

Conclusion 

The uncertainty caused due to the 2020 crisis can further give rise to more financial anxiety in 2021. Whether your business has suffered in the initial phase of launching or a brief pause on functioning, this is the right time to rebuild your financial structure. It takes currency to bring in currency therefore business funding can be a convenient option for gaining ground over the competitive marketplace.

Finance