Just 40% of U.S. business owners applied for a loan in 2017, down from 45% the previous year. With less competition, more applications were approved for the full amount than were requested in 2016. That’s because a small business loan is just one of the ways to fund a business – for example, there’s self-funding using credit cards or a second mortgage, partners, cloud funding, crowdfunding, venture capital or even angel investors (affluent people who are willing to invest in a business).
You’ve probably heard the statistics, 9 out of 10 startups fail within the first five years, so before you take out a business loan or drain your own personal savings account, it’s a good idea to look into some of those other options. These tips can help you get the funding you need to grow your business, whether it’s in Louisville, Boston, San Diego or somewhere in between.
In This Post:
Write a Solid Business Plan
If you hope to attract investors, you’ll need a solid business plan to get them excited about your enterprise. No matter how great your idea is, you’ll have to communicate it effectively, and back up any claims with extensive research. This will help ensure investors of your industry knowledge while providing them with a picture of how to run your business.
Make Sure You’re Scalable
Business investors want to know that your company is in a position to grow and scale. Your odds will be much better if you can paint that picture for investors, showing that your company has potential for billion-dollar or more outcome so that they understand the potential return on investment.
Spending Lots of Time Networking
The very best way to find the investors you need is by networking. Include lots of time in your schedule for attending local events and talking with other business leaders to naturally build relationships with others in your industry. Share your knowledge or skills and offer advice to established business owners who might just connect you to a venture capital firm that was key in launching their startup. Or, they may even offer to invest themselves if they really like your idea. The more connections you make, the closer you’ll be to getting the funding deal you’re looking for.
Don’t Give Up, Learn from Your Mistakes
Sometimes a “no” is just part of the road on the way to a “yes.” Even if your business idea is truly great, it may not immediately be seen that way – oftentimes there are rejections and obstacles before that answer becomes a positive one. Many successful entrepreneurs can easily recount the many times they were rejected during their careers. Don’t give up, simply take solace in the fact that lots of accomplished people have only become successful after initial rejection.
Look at an initial rejection as an opportunity to learn by examining your business model for any weaknesses. If the rejecter doesn’t tell you why he or she decided to pass on your project, ask. If you can take care of particular issues, you may be able to make the business idea more attractive to others or change the minds of those who initially rejected it.