One of the hardest things to do as an entrepreneur is getting money for your small business. Unlike operations or marketing, money requires that you sell your business concept to a variety of people. They need to take a risk on you and provide you the money you need to start. Naturally, you’re also going to need to pay it back. So, where can you find money and who can you ask to finance you? Today, we’re looking at all the ways of getting money for your small business.
1. Fund yourself
The first place you should look to get money for your small business is your own bank account. You’re going to be the most receptive to giving your small business money. But, the idea is that the business will pay you back. You would be loaning your business entity the money. You could pull directly from your savings account or consider a loan against the value of your home. Lastly, you could borrow through your credit cards – but avoid it when possible. While not always the most robust option, self-financing is a natural place to start.
2. Get money for your small business from friends and family
The next place to get money for your small business is from your friends and family. While this can be an awkward conversation or something you want to avoid, friends and family know you. If they feel the idea is good and that their investment will pay off, they will be happy to support you. That said, when it comes to family/friends and money, it can complicate your relationship. Make sure to be upfront, honest, and open with them about your business’s success (or failures).
3. A small business loan
Next on the list is approaching a bank for a small business loan. Many provinces, Ontario especially, have programs that help connect you with a bank. These programs offer training and ongoing meetings but give you better rates than you usually get. If you’re not eligible for these programs, go through a local bank. While you may not get the same deal, they can certainly provide you with startup funding. You will need to have all your business documents ready, as well as a detailed business plan.
4. Government grants
While not significant in number, there are a variety of government grants you could apply for. If you’re a member of a minority group, work in farming, a young person, or have a great idea, there are government grants available. Many of these grants are competitive in nature, so you’ll need to be at the top of your game. You can use the Canada Business website to peruse these grants.
5. Venture capital and other angel funding
One of the best ways to get larger funding is through VCs or Angels. These deals need you to provide a significant percentage of your business in exchange for cash to operate and grow. VCs are selective in their support and want to find businesses that will result in big payouts. As such, if your long-term goal is to continue to be a small business, they will likely pass on you. Instead, VCs look for businesses that will grow exponentially and sell to a bigger company more often than not.
6. Protect your small business finances with insurance
One thing to consider after you get money for your small business is having insurance. One of the quickest ways to negate all your financing is running into legal trouble. It could be an error or omission, a liability problem, or someone injuring yourself on your property. Whatever the case may be, business insurance should be a top consideration to protect you and your business. This is especially true if you run a home-based business. The worst that can happen is you’re unprotected, and your business goes bankrupt as a result. It’s just one of the innovative insurance products that isure offers to help small businesses thrive with peace of mind!