One of the biggest challenges faced by entrepreneurs today is accessing capital to finance their start-ups. It is no secret amongst entrepreneurs that significant number of businesses don’t make it past six years before going into administration. While there could be other reasons for their failure, but lack of finance is often among the causes.
Even if you are able to raise some funds to kick-start your business, raising enough money to compete with established brands and keep your business running smoothly is difficult. Here are some smart options you can explore to help get your business off the ground.
1. Explore Incubators
Incubators are one of the smart ways you can use to power your start-up. Here is how incubators work: they offer you resources such as office space, marketing, management training, business tools, laboratory, money, mentorship, and more in exchange for shares in your business. An incubator can be a university, a business school, or a private or public organisation. Some incubators are for-profit while others are not-for-profit.
2. Partner With a More Established Firm
You can partner with another firm to help you develop your product. The challenge lies in finding an established company whose strategic interest aligns with yours. There are many companies like that who are willing to invest in start-ups with disruptive products with the aim of using the knowledge and experience gathered during the product development and the product itself to compete in their marketplace.
3. Give a Major Customer a Strategic Advantage
You can approach a big customer to commit to funding your product development with a promise to let them be the first to buy and use your product before others can. To sweeten the deal, offer dedicated support and tailor your product to meet their unique production process.
4. Barter Your Products and Services
You don’t have to pay for everything you need in cash; you can offer your product or service to another business whose asset you need. Let’s say you are developing accounting software; you can offer accounting service in exchange for an office space. You’re only limited by your own imagination here, as bartering is increasingly becoming a vital part of business negotiation.
5. Loans With Long Repayment Plan
The challenges start-ups face with loans is the high-interest rate, unfavourable charges, and short repayment term that puts them under a lot of pressure. There are smart alternatives that enable you to pay over an extended period with fixed repayments. Before you approach any bank, ensure you know the real cost of developing your product, then use an online loan calculator to know how much you can access.
Crowdfunding helps you to raise funds for your business venture from many people who contribute little amounts that can amount to what you need to get started. For crowdfunding to work for you, your product or business idea must resonate with a lot of people and add value.
Crowdfunding has helped many entrepreneurs to raise funds for their start-ups. Platforms such as Kickstarter, GoFundMe, and Indiegogo offer staggering statistics of successful crowdfunding campaigns.
Regardless of the option you go for, there are usually sacrifices to make which is better than not starting at all. Consider the trade-offs carefully and go for the option that best suits your situation.