5 Ways To Fund Your Business Without Angel Investors What do you think is the best way to fund your company and do you have any experiences with angel investors?
By David Wither •
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Angel investors are a great way to fund your business ideas. The problem is once you take on investors you answer to them. The last thing you want to do is spend time pitching, reporting back, and groveling for money when you run out of first round funding.
A lot of business costs don't require you to hunt for the big money. 80 per cent of successful businesses started out with less than $10,000. You don't need hundreds of thousands of dollars to get your startup off the ground. You're going to learn about how to fund your business without the help of angel investors.
Try Bootstrapping
The first option you have available to you is to not seek funding at all. Start by bootstrapping your company. You could barter services with other startups, opt for a shared office space, and utilize free marketing options online to get your first customers.
An increasing number of organizations are opting for this way of doing business, and it's worked for them. The idea that you need investors is an archaic one. With the rise of the online world, you can start a successful business with no more than a few hundred dollars in your pocket.
Put it On Your Card
Those with good credit records may have relatively large credit lines. You can easily put a few thousand dollars on selected cards. It's unwise to take out all the money at once, though. We recommend taking out no more than 35 per cent of your overall credit limit at any one time.
This is because when you go over 35 per cent you will start to hurt your credit score. That makes it harder for you to secure credit in the future.
One smart way to get more money is to use both your personal and business credit cards. These are registered to two separate entities, so you won't get penalized for taking out more.
Short-term Cash Injection with Payday Loans
The concept of a payday loan has been around for a long time. They have acquired a bad reputation due to people not being able to pay them back. What a lot of people forget is that the downsides of payday loans only kick in when you fail to make the repayments on time. Financially disciplined entrepreneurs find these to be useful tools for covering those short-term expenses.
For example, you may find that one of these loans can pay off your contractors while you wait for a client to pay their invoice. You can take these loans out and pay them back in a matter of days. The best part is your credit score isn't taken into account.
Get Family and Friends to Help Out
A lot of entrepreneurs will approach people they know for money. This could be for short-term or long-term expenses. It could be for a loan or for a share of the company. It sounds like the easy option, but you need to take care when you're doing this.
The main problem is that a lot of family members and friends will expect to get their money back. They won't take into account the risks involved. You need to make it clear they could lose everything if things go wrong. More than one relationship has been damaged forever because of loans like this.
Finance Using Your Assets
Avoid keeping your business and personal life separate, if you want to avoid using investors. If you own your own home, you could get a second mortgage. Release equity on some of your current assets and consider selling others. This will give you immediate access to money to begin launching your business with. Plus, you won't have to give away any of your company or deal with any creditors.
Do keep in mind the risks of things going wrong. Taking out a second mortgage on your home could lead to you being made homeless if you fail to keep up with the repayments. It could also lead to you facing bankruptcy.
Last Word – Think Carefully
Do your financial calculations when taking out any of these loans. Funding your business using these five methods can allow you to function without angel investors, but there are always risks attached. With sound financial management, though, you can give yourself the best possible chance of funding your company without defaulting later down the line.
What do you think is the best way to fund your company and do you have any experiences with angel investors?
