While they may be underrated by some, small and independent businesses remain critical drivers of economic success. This has previously recognised by Western leaders such as British Prime Minister David Cameron, who understand that technological and social factors have combined to empower small businesses with the capacity to generate millions for the global economy and create a continuous stream of employment opportunities.
While the dream of launching an independent business may be more attainable than ever before, however, there remain practical and economic issues that can ground even the most innovative commercial concept. Raising the necessary capital to launch a business start-up provides a relevant case in point, as while this a crucial stage of the process it is an be extremely difficult in the face of stringent lending regulations and financial austerity.
3 Innovative Funding Ideas for new Business Start-ups and how they have been Applied
With this in mind, today’s entrepreneurs are at least fortunate that they can rely on a number of creative funding options, which have been designed to help individuals bring their ideas and concepts into life. Consider the following:
1. Consider the benefits of Product Presales
It is a common myth that funding is required to begin trading, as aspiring business owners usually develop a product or service long before they have a fully integrated company model. If you do have a fully developed product but require funding to launch mass production or marketing drives, however, you may want to consider selling goods as a way of raising capital. By selling a relatively small selection of products directly to the consumer market or through an affiliate website, you can raise significant amounts of cash that can subsequently be invested into further development, boosting your inventory and creating national awareness.
This was a process followed successfully by entrepreneur Priska Diaz, who is reported to have raised $50,000 in revenue through the presale of her Bare air-free baby bottles. This capital proved vital in helping her to create an infrastructure around her products, while the process of selling to consumers also afforded her global exposure and the opportunity to develop a strong social media following. This made it far easier for her to successfully launch her business on larger scale, and offered an insight into how many products she could expect to sell once fully established.
2. Source Crowdfunding for your Business Venture
While it is scarcely a new concept, crowdfunding remains an excellent way of acquiring funds for your business launch. Resources such as Kickstarter and Indiegogo dominate this sector, and they operate by enabling small businesses to pool investments from a number of different sources within a single, online space. This money can then be invested into driving commercial growth, while entrepreneurs may also benefit from the fact that they can accumulate money quickly and without having to offer up an equity stake in their business. It is also far easier for new or innovative businesses to access funding through these mediums, and often their biggest challenge is choosing a viable and reputable platform to partner with.
Perhaps the best example of successful crowdfunding was delivered by open-source game console Ouya, which emerged at a time when experimental and innovative gaming concepts were still in their infancy. By eschewing traditional lenders and marketing their idea through Kickstarter, they managed to acquire a staggering $8.5 million in investment within a brief, 29 day period. This capital enabled further development of the console and allowed designers to bring it to market within 10 months of sourcing funding, without forcing them to sacrifice a significant amount of equity in the company as a whole.
3. Establish a Simple Side Venture Online
Not all business ideas are created equal, which means that while some require significant funding to develop and launch successfully others do not. This creates a unique and innovative method of funding a new creative concept, as you look to generate income through a more simplistic and easy to establish business model and market this online. While the impact of Google’s latest Panda update may have altered the course of online marketing and changed how websites achieve their optimum search engine ranking, for example, it remains easier to generate income from a blog or easily accessible online platform than it is by developing a mobile application or physical product.
This was proved by successful entrepreneur Alex Genadinik, who is renowned for launching the tech start-up Problemio.com. The company, which develops mobile applications to enable strategic business planning, was launched after Genadinik had raised sufficient income through his website ComeHike.com. So simply by creating a basic and simplistic website that was developed organically and connected users with popular hiking tours, he was able to build revenue and use this to fund the requisite research and development for his primary business model. Genadinik’s side business model also offered him exposore to a potential consumer base for his new venture, so that he could establish a core base of interested customers prior to launch.
These are only a few examples of how to fund your startup effectively and efficiently. How did you manage to fund your business project? Please let us know in the comments section below…