The most important ways to finance projects and start-ups (explained 5 ways)
The most important ways to finance projects and start-ups (explained 5 ways)
You have to choose what suits you, so before you start the project implementation stages, think about how to provide a financial source, otherwise you will be disappointed by your inability to carry out your project activities.
In this article, we will look at the best and most popular project financing methods that you can rely on to fund a new project or business.
The most important ways to finance projects and start-ups
Although the process of finding project funding is a difficult process, it must be done to ensure the sustainability of your project, as I explained in the introduction.
Financial support at the start of your business is the fuel that will propel your startup towards achieving the goals you set for yourself.
Supporting a project in person is often stressful and requires you to spend all of your money on your business.
Some entrepreneurs also said that their biggest mistake was to keep spending on the project with their own money without looking for a funding source.
Now, here are the top 5 ways to fund your business or startup:
1. Bank loan
One of the most common traditional methods of project financing is to obtain a bank loan to start operations and manage project operations.
The entrepreneur will generally be required to provide a personal guarantee, pledging all personal property as security to repay the loan.
However, since the banking crisis in 2008, the change in the banking structure and new regulations imposed on banks have made it difficult for small businesses to obtain any kind of financial support.
Bonus tip: try to find banks that understand the quality and capabilities of small businesses, so it will be easier for you to get a loan.
Remember: the banks are quite strict when it comes to loan repayment dates, so you need to make sure of the project plan and financial situation before applying for the loan so that you do not face any financial problems.
2. crowdfunding
Crowdfunding is one of the most important ways to fund projects. Crowdfunding is one of the fastest and safest ways to get funds for your project.
why? Since your donors (those who gave you money) won't ask, they only want the product or service you promised...so how does crowdfunding work?
Provide a description of your business or project through crowdfunding platforms such as:
On crowdfunding platforms, anyone can give you money, be it an individual, an investor, or an entrepreneur.
Some crowdfunding sources that allow the public to obtain products to finance businesses exclusively, have been successful with many of the giant companies that we know today.
Pro tip: do everything you can to get people to know more about your business and invest in it; Since crowdfunding has become so competitive, thousands of companies run campaigns every year in an effort to win people's sympathy and support.
Types of crowdfunding
1. Crowdfunding for donation purposes
There is no financial return for shareholders. Disaster relief efforts, charities, and nonprofit organizations often benefit from this type of funding.
2. Reward-based crowdfunding
In this type, there is a "reward" for the financial contribution, often in the form of a product or service.
Reward-based crowdfunding campaigns are very popular with early-stage startups looking to develop and test rapid prototypes to see what the public is thinking.
3. Crowdfunding the actions
There is ownership in the company of the shareholders - who are often the investors - in exchange for economic contribution, and therefore as shareholders; They get a financial return on their investment and a share of the company's profits.
Pro tip: Tell a story, there's nothing better than telling a story to seduce and sell any idea even if it doesn't work...Anyone who tells a story has a powerful tool.
Storytelling is an effective way to boost your campaign on crowdfunding platforms and get contributions from internet users.
Tips for successful campaigns on crowdfunding platforms
1. Provide evidence that your product has value: People have to feel the value of your product or else they won't give you money.
2. Promote your campaign – After publishing and sharing your campaign on your social media accounts, sharing it with friends and family and asking them to do the same, consider investing in a Sponsored Facebook Ad.
The broader your reach, the more likely you are to see investors or people interested in your product.
3. Tweak if you don't succeed: If you don't succeed at first, try again, that's not the end, making small changes to your campaign can make a big difference to the money raised.
If your project is funded, be sure to keep the promises you made to the shareholders, as this will satisfy the investors and build credibility for the future projects you want them to support.
3. Venture capital companies
People often confuse venture capital and angel investing. The difference is that the former is a group of companies that invest their financial resources in a project or start-up company and co-own it.
While the second is an individual investor and not a company.
To get investments, you can propose your project to venture capital companies in order to get financial support in exchange for the contribution (equity) to your company.
It certainly has benefits such as gaining investors who can advise you and the kind of experience you need to make your business a success because they are constantly working with successful and unsuccessful companies so that they get to know the market and what makes the company successful.
However, one of the risks of venture capital is the competitive nature, which can make it difficult to convince them to fund your business.
But the good news is that venture capital is mostly focused on fast-growing startups. It often takes a lot of hard work and effort to get the support you need, so don't give up and don't give up.
Tips for getting financial support from venture capitalists
1. Presenting an Attractive Product:
Investors see many products every day, many of them are counterfeit, and many of them do not have much potential to survive, so you need to invent a product that catches the eye at first sight, and the investor should not leave the room unless he insists on investing in your product.
2. Briefly describe your business in one or two sentences at the most:
Your job description should be short and complete, and it's a complicated equation, I know, but try to practice it.
Remember that the investor does not have much time to hear about you and your project, so be aware of the gist of it, and this is the strategy that Apple uses to convince the public with its products.
3. Practice Brainstorming in the Promotion Elevator:
It is a technique based on the imagining that you are with an investor in an elevator, so you have a few seconds to convince him to invest in your project, so what about that? This exercise allows you to focus on the points you need to mention about your project.
4. Business Incubators and Accelerators
One of the most popular forms of project financing for entrepreneurs and entrepreneurs is joining accelerators and business incubators, and it should be noted that accelerators are the reason business giants like Uber, Airbnb and Reddit exist.
Let me explain the difference between an accelerator and an incubator:
1. Incubator
Offers support and guidance, but on how to get started; Like identifying the right product for the market, developing a business plan, reviewing and addressing intellectual property issues is also at this stage.
Incubators operate during official business hours. You focus more on the longevity of the startup and less on how quickly the business is growing.
In other words, the incubator focuses on companies that are still in their infancy and have an idea, but there is no business plan to turn that idea into reality.
2. Accelerators
It provides support, direction, and direction to the startup and small project, and the accelerators run over a set period of time, typically three to four months.
During this period, startups build their businesses with the support of mentors and capital provided by the accelerator.
At the end of the program, startups have the opportunity to pitch their work to investors. The Accelerator program focuses on growing projects that already have a clear business plan and want to move forward.
Accelerators are more selective in choosing the companies they support, for example: Y combinator, which supplied us with the companies I mentioned earlier, such as Uber, only accepts 2% of companies that request an escort.
I believe you now have a clear understanding of what accelerators and incubators are, and can decide which ones to join depending on the status of your project, whether you're just starting out or need a helping hand to grow.
5. Grants and government support
There are many government support programs provided by the state to improve the level of the economy or encourage entrepreneurs to enter the market due to the positive impact of entrepreneurship on economic growth, or to support young people and people with innovative ideas.
These programs can be irregular, for example, non-annual or run from time to time. The important thing is that when you find these programs, you can apply for them.
Information: Make sure you have a plan ahead for your action, it shows that you are someone who knows the direction of the compass and knows how to act on the data; This can make it easier for you to enroll in these programs.
You should read the terms of any program to which you apply carefully, as some governments have strict policies on the number of employees that must be on the project.
Also, scholarships offered by entrepreneurs are a good opportunity to start your own business, and these scholarships can take the form of challenges, hackathons, or launch contests, which reward good ideas with cash prizes (usually the amounts you start with).
To find out more about these opportunities, search the internet in your area or country and you are sure to find plenty of them, or you can find out what kind of local business competitions these are to see what opportunities are available.
The conclusion of the above:
Before you start your own business or a new venture, make sure you have enough money to start the business and don't risk financing it yourself.
After what I have told you in this article, it becomes clear to you that there are many ways to finance a small business and surely if you have a good product that can compete in the market then all of the following can be had. Easily.
Comments
Post a Comment