Whether you’re thinking about starting a business or you’ve already started a business, money is extremely important. In this video, I share 10 ways you can raise money to fund your business.
- Traditional Banks
- Advantage: Well trusted source of funding that’s been around the longest.
- Disadvantage: Approval is hard. You need to have good credit and good profits.
Timeline: Takes MAD long (preparing a business plan, presentations, meetings, more meetings, etc.)
- Friends & Family
- Advantage: They care about you and seeing you follow your passion.
- Disadvantage: It’s a dangerous game when you’re putting relationships on the line.
Timeline: From a few days to a couple of months.
- Credit Card
- Advantage: It’s pretty easy to get a credit card. Sometimes even if you have bad credit.
- Disadvantage: Using majority (or all) of your balance will hurt your credit score.
Timeline: Instantly, if approved. It does, however, take 5-7 days for your credit card to come in the mail.
- Venture Capital / Angel Investors
- Advantage: Invests in people and not credit scores. Great if you need to raise a lot of money. Even better for access to their networks.
- Disadvantage: The more you borrow, the more you’ll owe. Also, VC/Angels tend to take control over the business decisions.
Timeline: From 4 weeks to 12 weeks
- Advantage: Get REAL customers to buy your product or support your cause. You retain 100% ownership of your company.
- Disadvantage: Not the best when it comes to ‘typical’ products. Also, be careful as bigger companies may use those platforms to find their next idea and with their resources, build it!
- Timeline: 45 days (15 days after the 30-day campaign ends)
Platforms: Kickstarter.com, Indiegogo.com, GoFundMe.com, & more.
- Peer-to-peer Lending:
- Advantage: Peer-to-peer which means easier to get approved. You also get better rates.
- Disadvantage: I’ve found more disadvantages for the investors in these transactions if the borrower defaults on the loan.
- Timeline: Roughly 10 days.
- Platform: Lendingclub.com
- Side Hustlin’
- Advantage: You raise the money by doing work you love. You never have to owe anyone anything.
- Disadvantage: Depends on the amount you’re trying to raise, it’ll most likely take longer to raise that amount through this method.
- Timeline: Varies (can take a long time)
Resources: Read 10 Ways To Make Money Online Today
- Invoice Advances/Cash-flow Solution
- Advantage: As long as you have a history of activity (based on invoices), you should qualify.
- Disadvantage: In most cases, you repay the advance once a week. This can be a great thing for some and not so great for others.
- Timeline: 2 – 3 Days
Platforms: Fundbox.com, FastPay.com
- Online Loan / Line of Credit
- Advantage: Easier to get approved than traditional banks.
- Disadvantage: Sometimes they have higher APRs than other methods.
Timeline: 2 – 3 Days
Platforms: Ondeck.com, Kabbage.com.
- Bootstrap / Do-it-yourself
- Advantage: EVERYTHING! You’ll learn a lot of things along the way, and you won’t owe anyone any money.
- Disadvantage: It’ll take longer to get to where you want to go. You’ll work A LOT more. But it’ll be worth it
- Timeline: N/A
- Ways to Bootstrap: Share an office or get a virtual office, hire interns from local colleges, get handy and build the things you can’t afford, get smarter about your personal spending habits.
Which method from this list are you thinking about using? Tell me in a comment below.
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