Additional Income Sources for Financing Your Business Plan

It’s not always easy to find ways to fund a company. It often happens that the funding needed to start a business isn’t enough and financing day to day operations can put quite a dent in your budget. That’s why it’s useful to use additional resources other than loans to make it through the first year of doing business.

It’s important to separate personal funds from those designated for business purposes because you want to make sure your personal finances aren’t affected even if the business fails.

Angel investors

Angel investors refer to wealthy individuals or organizations that work on finding and helping new and small startups that have the potential for quick and intense growth. If your business seems like such a startup you could start looking for the investors that are best suited to your industry and your corporate vision.

The main issue with using the services of an angel investor is how to divide the control of the company you’re now funding together. This is especially difficult if the company has more than one founder and you need to find ways to make the decisions together.

Government grants

The government has numerous programs designed to help small businesses become self-sustainable. It’s mostly because there are industries that are beneficial to the society at large. Applying for these grants is usually a complex process and you need to meet the requirements set by the government in order to gain access to the funds.

Most of the time, the grants aren’t provided by the government directly. It’s private financial institutions that do this and the government is there just to guarantee that you’ll pay back the money even if you don’t have a perfect track record with loans.

Personal funds

It’s sometimes necessary to tap into your private funds to cover up the gap in the business finances or to be able to start a business without getting tied in with a bank for years. This is a difficult decision to make and it’s best not to use your day to day income for such projects.

Starting an additional gig to fund a long- term project is probably the safest way of doing it. It doesn’t have to be a challenging side job – you can get paid to do surveys and direct that money towards some smaller business advancements.

A business relationship

This is an option best suited to those who sell physical products and are focused on business to business sales. That means that you make a long-term deal with one particular client. You’ll provide them with your products on regular bases and they pay you in advance.

It’s a useful arrangement because it allows you to use the money you need right away, while providing the goods on your own timeline. However, that also means that your business is tied with the success of a company beyond your control, which can be a scary thought.

Crowdfunding

Crowdfunding is a relatively new method of financing businesses and it has proven to be very useful for businesses of all sizes and industry. The funding is provided via pledges from your online followers. They pay for the product in advance based on your description of the product. In return you’ll provide them with perks and bonuses once the product is created.

This is best suited to businesses that involve creative work and flashy design. It’s also very much dependent on the quality of your social media campaign.

There are ways to fund a business without going to the bank for a loan. They require a bit more work but they also mean more freedom.

One thought on “Additional Income Sources for Financing Your Business Plan

Leave a Reply

Your email address will not be published. Required fields are marked *