After coming up with a business idea, for example, a packaging business, the next major hurdle is getting funding to turn your idea into reality. But that is still not the end of it. You will need resources and time to keep your business afloat in its infancy stage.
Luckily, there are several options for funding a business. You only need to know which and how to leverage each. This guide highlights options you could leverage for your new business, so keep reading to learn more.
- Taking Out A Personal Loan
A personal loan is not the best option for starting a business because of the high interest rates attached to them. However, to some people, it is the only available option.
Banks will usually require that you provide proof of income to access findings, in which case a paystub can serve that purpose.
If you are self-employed, you could leverage an online pay stub generator like Form pros to generate pay stubs that are acceptable in banks as proof of employment.
- Take A Business Loan
A business loan, as the name suggests, is a type of loan tailor-made for businesses. As a new business, accessing a business loan from a bank can be quite a challenge because of the many requirements.
For example, small businesses may not have the high credit scores lenders require when extending lines of credit. Also, they are viewed as high risk, considering that 50 percent of all small businesses fail within the first five years.
If your packaging business can satisfy the lender’s requirements, this would be an ideal option as it comes with lower interest rates than personal loans.
- Borrowing From Friends And Family
Some funding options may be closer to home than you may have imagined: friends and family. While not many people have enough money lying around to fund other people’s ideas, there is a chance you can find such people in your circle of friends and relatives.
You do not have to get all the funding from one person. You can get small bits from different people to fund your projects. Some of your lenders will want to get involved in your business since recovering their funds will depend on your success, so you may want to be ready to have other people share their ideas on the everyday running of your business.
- Angel Investors
Angel investors are high-value individuals who fund great ideas for a stake in the business. A good example of angel investors would be the shark tank panel, the only difference being that these once have a TV show, and almost everyone knows them.
What you need to look for are low-key angel investors in your region, pitch your idea to them, and have them decide whether to get on board or not. You can find angel investors on sites like Angel Capital Association, Angel Investment Network, and Pipeline Angels.
Having angel investors in your business involves relinquishing some control since they will want to be involved in it to ensure their money grows, which would mean your business grows.
- Venture Capital Firms
Venture capital firms work more like angel investors; the fund businesses for equity in the business also means being a part of the business decision-making process.
The only difference is firms are companies while angel investors are individuals. They select businesses carefully to ensure that they invest their money in businesses that will guarantee desired returns for them.
The main goal for venture capital firms is to accelerate business growth to a point where it is big enough to attract a buyoff by bigger corporations or go public. This option may not be ideal if you do not plan to relinquish control of your business in the future.
Conclusion
While starting a business is both exhilarating and intimidating, finding an appropriate funding avenue can provide the solid foundation needed for your success. The good news is there are various ways to fund a new venture like a packaging business.
But no matter what choice you make, keep in mind that all options have merits and demerits. So, choose the route that serves your business needs best. Always remember to consider the realities in terms of interest rates and control over decision-making.
