How to Fund Your Small Business

Small businesses are of utmost importance for a country’s economy. Being a source of an economic recovery in the times of crises, not only do they hire the majority of people but they also serve large companies on multiple levels, enabling big industry players to operate their business without any interruptions.

Since most of the small businesses start as a one man’s idea, the path from just an idea to a successful realization is not so easy and may have many bumps along the road. All such ideas require initial capital to fund the actual realization of initial plans and fund your small business until profitability is reached.

Wondering how to get funding for a small business? Here are some of the most common ways for raising small business fund capital.

Invest personal assets in your business. Very often, startup entrepreneurs decide to invest their own capital and savings into their business ideas. As a beginner, attracting sponsors and investors may be an extremely difficult task, so funding your own ideas or involving into partnerships is probably the best way to get you started. Along the way, when the time gets right to request funding from angel investors, the fact that you have your personal assets invested may be an excellent foundation to build trust with your potential investors.

Family and friends investments. What comes as an intuitive solution when additional funding of your business ideas is needed is to reach out to the ones closest to you: your family and friends. While borrowing or raising funds from your family members or closest friends may sound as the best solution at that particular moment, there are certain things you should consider prior to taking this approach. What happens if your business idea fails? Will you ruin the relationship with your closest friends and relatives? So think this idea through all the way, and propose an honest and trustworthy deal. Seek legal advice and instruct them to look for help as well before engaging in this plan.

Bank or other types of small business loans. Sometimes you may be forced to take on this road as well, no matter if you used any other method, so be aware of the fact that this method requires a lot of work and guarantees from your end. Although there are many companies offering assistance and advice on how to get funding for a small business, this particular approach may require a lot of your attention and paperwork in order to get through. It is the most common one among business owners that need significantly larger funding than the ones that can be raised from friends, relatives or from their personal savings accounts. Unlike with being funded by an investor, by taking a loan you do not actually give away a part of your business.

Finding the right investors. As opposed to all the previously mentioned methods, this approach requires you to build a lot of personal connections based on trust. Finding an angel investor may be harder than what you think, and it will certainly take a while until you meet the right people interested in investing in your personal company and/or product. Presenting such investors with realistic business forecasts may be of key value for your future cooperation. Attention to details will be of utmost importance when it comes to the realization of such agreements and putting them on paper. Weigh what you will give away and what you will get in return.

The main reason why people decide to start their own small business company is because it gives them certain independence, so some may find certain methods described here as a limiting factor to their original idea. This article may give you just general ideas regarding start up funding for small business which will certainly be a great starting point. Today’s economy requires business owners to be creative enough to find all the possible funding sources for their businesses, as needed.

Karin Jakovljevic

About the author

Karin Jakovljevic

Karin Jakovljevic is the head of marketing at Ximble, a powerful, cloud-based workforce management system, simplifying employee scheduling and time tracking for retailers, restaurants and small businesses.

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