The Startup
Published in

The Startup

5 Easy Ways Young Entrepreneurs Can Finance Business Ideas

The world is full of ideas and the business ones are not an exception. The problem is that ideas are often misunderstood (artists should know it) and that’s why most of them end up unrealized.

Of course, the fact that someone doesn't understand your idea is not the end of the world, but if that someone has the funding, then maybe it is.

As a young entrepreneur you probably don’t have a strong business background and maybe this is your first time trying to start a business. In this situation, it might seem impossible to get the funding, but today there are a number of different ways to finance your business.

Nonetheless, you need to be very careful and you need to know everything there is to know about small business, especially when and how they fail.

For this might happen. And it’s not such a big deal — it happens to everyone. But it turns out into a big deal if the person who invested is not you.

That’s why you should be very careful with the approach you take when it comes to loans. In this story, I won’t even discuss mortgage because it’s the last option and I think there are easiest ways to consider before making that step.

If you’re in a position where a mortgage is an only remaining option I would recommend you to visit a serious professional adviser instead of trying to find free advice online.

1. The Traditional Way

Tradition is nothing more than following the footsteps of others and playing by the rules. This is pretty obvious from the fact that today still three-fourths of new firms seek to finance through a bank or a traditional lender.

Of course, this doesn't mean there’s something wrong with this option — it’s just a most frequent one and at the end of the day you’re the one who will decide if it works for you.

Just keep in mind that if you plan to get your funding from credit cards and business loans, you’re gonna need a top-notch business plan. It might seem silly to say this since it’s understandable that you’ll need a good business plan in order to search for funding, but for filling out a loan application in a bank you need to have every detail of your business planned, especially its growth in the future.

So if you think this option is right for you, do an extensive research of the marketing strategies for the future.

2. Go Online

In these modern times, everything can be found online, even investments.

The same way the shopping is easier via clicks from a comfortable chair, the funding is easier because there are no restrictive eligibility criteria that can be often found among traditional lenders.

In a real world you’ll maybe not be able to qualify, but in a virtual one you’re ready to go. So, get ready Player One!

Although I’m joking a bit there is some truth in this and you should definitely consider online lenders.

The world of online finding also has its own rules, but advantages are pretty obvious — the waiting time is increased to a minimum and the eligibility criteria is far less strict.

Of course, the vast Internet space also hides many personal offers that can be quite tempting. They can seem (and sometimes be) a pretty good alternative since they don’t require the collateral.

But don’t get carried away too easily — always calculate additional cost that comes with the loan and the interest rates so you’re sure you’ll be able to repay.

3. Present It to The Crowd

Although we can say this is a part of the Internet solution, this type of funding has nothing to do with programs nor machines.

It’s the same as standing in the middle of the square and advertise your business by shouting out loud, but we've become a little bit more civilized by now, haven’t we?

Jokes aside, crowdfunding is increasingly popular, but by far the youngest financing strategy.

It can be very efficient which can easily be proven by the number of successful Kickstarter of young entrepreneurs. What makes it different from shouting in the middle of the square is that today your main required skill is not the power of persuasion (although it still is important) but how well connected you are.

The point is to make people talk about your business idea in order to bring a strong community around your firm that will bring you the necessary finance.

Although this is the type of funding where every individual invests little and there’s usually no need to repay, you’ll probably gonna have to invest in your networking skills.

4. Momma’s Little Genius

If the almighty Internet fails you (and this doesn't happen so often) there is always one more sanctuary you can turn to — Your Family.

I believe that it’s the last option in your mind. Since you’re your own man now, but you’ll be surprised to realize that this is actually a very common way of financing.

And why wouldn't it be? They are your parents (brothers, sisters, maybe even friends who are ‘like a part of the family’) so it goes without saying that you won’t be paying any additional fees or interest.

There won’t be as much money as there would be through the business loan (unless you come from a family of Rockefellers, but then you wouldn't go around searching for a loan, would you?) but it can be a good start.

The much bigger problem lies in the fact that Mommy knows you better than anyone in the world, so you may end up going through an even more rigorous assessment process than using traditional channels.

In other words, she definitely knows if you’re a leader or not, and even if she chooses to turn a blind eye if something goes wrong her ‘I told you so’ can be worse than any interest.

5. Only Heaven Knows

If you are reluctant to make deals with your family you can always look up at the sky and try to find your guardian angel. Or, in this case, guardian investor. This one is not a joke, actually.

The angel investor is a person who is a former entrepreneur or professional that can provide a growth capital to up and coming ventures. It’s his contribution so there are usually no tricks behind this gesture.

They operate alone so their financial resources may be limited, but there’s a pretty good chance he has more to offer than your mom and dad.

Nonetheless, they do have their own evaluation process — it might not be so rigid, but keep in mind that they've been in your shoes and know how it works.

The very fact that you could be standing before your guardian angel suggests that you should carefully plan your approach.

Conclusion

As you can see, there are a lot of ways you can finance your business idea and, as I said, it’s up to you to figure out which one is best for the nature of your business.

Are your products/services something pulled out from a rulebook, or are they a captivating crowd pleasers?

Maybe they are the materialization of your childhood dreams that only your friends and family will be able to understand at the beginning?

Or maybe they’re unique visions that are just waiting for their pair of wings?

Call to Action!

THANK YOU for listening this story. If you like this story, hit 👏 button and share it with someone else!

Do you want actionable writing advice from successful writers? Get your FREE Copy.

This article originally published at Sarv Resource

This story is published in The Startup, Medium’s largest entrepreneurship publication followed by 310,538+ people.

Subscribe to receive our top stories here.

Get smarter at building your thing. Follow to join The Startup’s +8 million monthly readers & +756K followers.

Recommended from Medium

New to working in Product? Here’s some recommended reading

How to Start an Online Texas Concrete Business

Finance Mindset for the 6 Key Components of EOS® Part 5: Strategies for Building Your Leadership…

In Selecting a Niche: Something You Should Know

Bringing your dream to life: 5 startup development phases

Managing Cash Flow in COVID-19 Times

Interview with Michael O’Neal — founder and host of The Solopreneur Hour [video]

Agency Growth Secrets Reviewed by John Hetrick

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Pawan Kumar

Pawan Kumar

Writer. Inbound Marketer. An Ambivert. Featured on Entrepreneur, Jeff Bullas, Addicted 2 Success, & HuffPost. My Newsletter: https://justhustle.substack.com/

More from Medium

My business idea.

Good Ideas Need Space

Dipak Barkale, Co-Founder of WillStar Media

Best Business Podcasts for 2022

Masters of Scale Podcast logo

Blog on The Lean Start-Up