When launching his business, Luckybobbleheads, CEO Alex Smith needed to find start-up capital.
“Adequate capital is required for starting any business. Obtaining funds to stock or secure a business premises was the biggest challenge I faced when starting my business,” said Smith.
“One of the most difficult aspects of launching a business is determining how to finance it. Although not every business necessitates a substantial initial investment, I had to ensure that I would be able to sustain my business over time for its growth and success.”
Smith found success using 3 approaches to obtain funds to launch his business.
Personally invest money
According to Gallup, 77% of small businesses rely on the personal savings of their founders for initial capital needs.
“By Investing some of my own money, investors and lenders were more willing to work with me over time due to confidence in my work,
Fundera also reports that a third of small businesses start with less than $5,000. With the proper budget, planning and savings available – a personal investment in your new business can be a fast and effective way to get started.
Apply for a small business loan to obtain funds
“Term loans from banks and other financial organizations are the best way to go for small business loans with the best rates and terms,” said Smith.
“Many banks were willing to support starting business owners with very little requirements. For instance, all I had to present to get a loan was a profit and loss statement, balance sheets, tax returns, and my bank statements. This loan helped me a great deal in increasing my stock and diversity of my product.”
Be ready for some extra leg work in pursuing a loan for your small business. Preparation and research are key to getting qualified, obtaining the loan that’s right for you and avoiding scams or poor terms that could leave your business at a disadvantage in the long run.
Find angel investors to obtain funds
“Angel investors are defined as accredited individuals with a net worth of more than $1 million and an annual income of more than $200,000. They usually work alone, but they may form a fund with other angel investors to invest in business either big or starting,” said Smith.
“Angel investors were an excellent source of cash for my business. All I had to do was capture their interest with enthusiasm and enticing statistics about my business’ current state and future prospects. I prepared a sound business strategy and pitched it to them.”
Angel investors are also known to bring a wealth of information to the table at moments of strategic growth. When seeking angel investment, look for investors that align with the values, market and interests of your business. Consider where this person or organization can bring additional insight or support to the table to further fuel your growth.