Starting up businesses, of course, seems to be the biggest challenge for many people. They are typically funding via a 'bootstrapping' method, home collateral, and friends and family loans. They all work, but they are just not that desirable.
Naturally not being aware of the other more traditional or creative ways to raise funds for your business hampers any chance you have for success, let alone growth. At the end of the day, you need the right amount of debt and the right amount of equity to make things work.
While many entrepreneurs and business owners would parade to the bank or their preferred local small business lenders to see if they can get a business loan, not everyone can qualify for this typical route. For one, most novice business owners lack the adequate financial history and credit rating to be eligible for a bank loan. Second, a lot of loan applicants do not own significant items and inventory which they can use as collateral. Third, most banks and lending firms tend to reject any loan request from individuals who lack the experience or the expertise on running a business venture, particularly a new one.
That said, you should not fret. Bank and lending companies may be the most common source for small business startup funds, but they are not the sole funding option left. If you are adamant in starting your own business, then perhaps it is best that you get those creative juices flowing and think of innovative ways of raising money for business start-up funding. While not all creative ways guarantee promise, but there are some that have helped a number of people. And such approaches might just work out for you as well. Let’s look at a few creative ways to raise funding for a startup business.
Become a product tester. Most countries now enforce a strict rule requiring manufacturing companies to ensure that their products are safe for human consumption and utilization before distributing them to the market. To do this, companies hire product testers, who are literally human guinea pigs. Products usually range from mobile phones, health care products, and electronic gadgets to mention some. The pay varies greatly, depending on the product and the company making it.
Write Movie Reviews
Write for money by making movie reviews. If you have a flair for writing and you enjoy watching and criticizing movies, then becoming a movie reviewer may just be your solution to your funding needs. There are quite a few online sites out there that pay for very well-written movie reviews and if you know just where to look, then it's only a matter of time that you get to watch movies way ahead of everyone else and be paid for it.
Loans From Angel Investors
Angel investors are normally regarded as individual-centric investors since they invest a lot on the individual's ability to drive a business to success. So to speak, they are more focused on growth instead of earning big profits. You can grab this opportunity and borrow from them to raise funding for a startup business.
Hold a garage sale. Nothing beats a traditional garage sale. While selling your prized possessions may be a bit hard on your part, you need to look on the bright side of it. You are selling so you can build your business. That equates to you striving harder to make sure your business succeeds.
Other creative financing alternatives to raise funding for a startup business include:
- Equity Credit Lines—You lend your business the funds on a secured basis
- Business Credit Cards
- Reverse Takeovers of a Public Shell
- Royalty and Revenue Sharing
- Vendor Financing
- Business Incubators
If we had to pick the most traditional method of 'alternative financing' today we would have to say its factoring or receivable financing. It's used by thousands of businesses to stabilize and generate 'lumps' of cash flow. It covers short-term emergencies, and lowers receivables and increases cash.
The bottom line is; there are numerous traditional/creative and alternative financing sources the business owner may not even be aware of. Seek out and speak to a trusted, experienced and credible business financing advisor who can assist you in coming up with creative business funding sources you need.