The Five Financial Funding Options You Should Consider When Venturing into a New Business

Financial Funding - Complete Controller

Now that entrepreneurs are becoming more prominent, more people are considering starting their own business. However, one glaring hurdle that tends to present itself is not having enough resources to put their dreams to reality. It might sound like an understatement but starting your own venture requires some funding. Without all funds on hand, you cannot start a business that demands production, operations, or marketing. If those funds aren’t readily available, the best course of action is to create a budget that brings your efforts the most robust returns.

Consider the following ways you can fund your venture. Check out America's Best Bookkeepers

  1. Crowdfunding

If you haven’t heard of crowdfunding before, you are probably not alone. It is a relatively new resource but one of the most popular ways to raise funds for a startup. In crowdfunding, an entrepreneur would post the details of their project on a crowdfunding platform. Promoting details of the project that makes it unique can entice investors.  You would display your business plan on the platform and wait for investors to reach out to you. This presents your idea to your prospective investors, and they can invest in it depending on how much you catch their attention.

In short, your plan is to be the contributing factor in making an investor put their trust and money in your project. In some cases, crowdfunding investors could promise to pre-buy your product as a donation, while others could give you feedback that can help you tailor your project in a way that makes it marketable and profitable.

  1. Angel Investment

Often entrepreneurs find themselves not having the means to start their project. On such occasions, people having enough resources to fund the project can become a savior. In finance terminology, individuals with resources to fund projects are called angel investors. Check out America's Best Bookkeepers

Most angel investors consider having an advisory team with them. This is usually a team of experts who analyze different project ideas, screen proposals and determine which project would bring the investor robust returns. Additionally, they can also offer entrepreneurs advice, explaining what might and might not work for the business venture. Most of the multinational companies like Alibaba, Yahoo, and Google have Angel investors as the main source of initial funding. By the look of it, the venture has only been fruitful for investors.

  1. Venture Capital

Venture capitalists are also individuals who could provide expert advice and mentorship to entrepreneurs. They will use their knowledge in favor of the entrepreneurs while also investing in their projects if they find the idea gripping. Venture capitalists mostly consider budding entrepreneurs as their prospective clients in comparison to other funding channels. So, if you are only starting your journey as an entrepreneur, venture capitalists might come to your rescue.

  1. Incubators and Accelerators

Another channel to fund your project is incubators and accelerators. They can be founded in every nook and cranny of different cities, assisting businesses and entrepreneurs in generating substantial profits.

Incubators are companies that would help establish the startup, providing protection and guidance to entrepreneurs through proper training or resources. In contrast, accelerators accelerate the business’s functioning, i.e., they would smooth the process. Both the incubators and accelerators contribute to a project for about four to eight months, waiting for the business to generate profits. Check out America's Best Bookkeepers

  1. Bank Loans

A bank loan is fairly straightforward; a bank is a financial institution providing financial aid to a startup. Loans are one of the most common options to fund a startup. To put it simply, banks mostly provide loans of two types – capital and funding.

A capital loan is one that runs on a cycle of revenue-generating operations, depending on the assumptions of debtors and stockholders. In contrast, funding includes sharing the details of your project while expecting the bank’s fair valuation. As a result, banks consider whether or not to sanction the loan.

When considering a funding source for your project, you should complete extensive research before relying on any source. Not every funding source is ideal for your project, so consider the details that involve funding your project and then pursue your financial plan.

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