Having a great idea might be the first step of any entrepreneurial endeavor, but it’s not necessarily the most important one. Sourcing the money to support your idea is the safety pin keeping your venture from falling apart at the seams. Without critical funds, your idea is nothing more than some cool words on a piece of paper or a great vision in your mind.
Talking about money is never easy, though. Wells Fargo, Ally Bank and deVere Group have all conducted surveys with folks around the world, finding that the overwhelming majority believes money to be the most difficult topic to discuss either with family or with friends. It’s undoubtedly a taboo subject that makes most people consider a hundred and one other options before they commit to talking about (and certainly not asking for) money.
But if you’ve got an idea churning and want to get it out in front of the public, you’re either going to need to be independently wealthy enough to finance your own dream or you’re going to have to get over the “money taboo” and find a way to raise the funds you need. Here are four sources to consider:
The People You Know
If you’re going to talk money, you might as well tackle the toughest targets first. While your friends and family should be supportive of you, asking them for help will require you to broach the dreaded conversation with people you actually know and who could be personally affected by the outcome of your startup, losing money if it fails to perform as hoped or expected. Make sure you choose who you solicit carefully, picking only the ones who can afford the risk. You don’t want to be responsible for your 72-year-old great Aunt Nancy losing her retirement savings if your startup goes belly-up.
A Crowdfunding Campaign
Much easier in the sense that you don’t have to make a face-to-face request, crowdfunding can be a great way not only to see if your idea can generate capital, but also if it even has the appeal to draw interest from a wide range of people. It also allows for many small donations instead of large lump sums, making it attractive for people who might otherwise be intimidated by the prospect of having to lay down bigger bills. Check out sites like Kickstarter, Indiegogo and GoFundMe to get a feel for how these types of campaigns work and pick the one that most closely aligns with your product or service’s objectives as each site will have a particular focus.
A Business Partner
Think of everyone you know and everyone they might know, and go from there. Sometimes a network is all it takes to get connected to the right person at the right time. Have a cousin with a wealthy friend in Mexico who wants to get to the United States? You may want to advise them to consult a professional eb5 lawyer to help them attain a visa in order to immigrate to the USA. Have a former colleague who wants to branch out on her own? Ask her to invest with you. Make sure everyone’s priorities match and expectations are realistic and craft a solid buyout option should things sour down the line. Then you’re ready to roll.
If you’ve exhausted everyone you know or might know, as well as strangers, you can also apply for a business loan. Both short (bridge loans) and long-term loans can provide the financing you need to get (or keep) your business afloat. Bridge loans are frequently used to help businesses survive until additional funding can be sourced, while traditional long-term loans can provide the capital needed to begin at all. If possible, try for a long-term loan before resorting to a bridge loan, as future investors could see a bridge loan as an attempt to resuscitate a dying venture.
Don’t let the money taboo be an obstacle to getting your startup off the ground. The first step to tackling any sensitive subject is acknowledging its existence. We all have to deal with financial issues. It’s time we all started talking about it.