For most entrepreneurs, they'll tell you their biggest challenge getting their startup off the ground is financing.
In fact, surveys show that nearly two-thirds of start-ups face financial challenges. There are ways to overcome this large hurdle.
Let's look at three common startup financing challenges and how to beat them.
#1: Start at the right time
For many people looking to begin a new business, they simply lack the personal capital to do it. They may not have any savings, and they may still be paying off student debt.
This is a common challenge for startups.
Most entrepreneurs need to start off with a little seed capital to pay for things initially. It can take many years for a business to make a product, so you want to make sure you are financially stable enough to begin it.
Right off the bat you need seed money to pay for staff, rent, leasing equipment, and marketing. This takes a bit of personal capital.
Often people who are middle-aged or older have enough savings to draw on in the early stages of their startup.
It's a good idea to have a bit of a nest egg as a personal cushion and for emergency funding no matter your age.
#2: Network, a lot
Another common challenge is not networking enough.
The best (and often easiest) way to get funding for your startup is through networking.
The challenge arises when you either don't have enough time to network, or you don't have enough contacts.
Some people don't have a large network of business connections or friends poised to offer financing.
You can overcome this challenge by getting in touch with old friends and acquaintances and joining appropriate local business organizations to start networking.
Well-placed connections are often key when you're on the lookout for investors.
If you fall into this category, it may take longer for your startup to garner the attention of the right people, but if you stick with it and do your time networking, you'll soon find that the tide is turning.
#3: Pick the right investors
Another challenge is finding the right financing mix. With many options available to you, you want to choose the options where you are most likely to be successful.
You might also want to work with more than one source in case one falls through.
Your options include:
Whichever way you choose to go, and you choose multiple options, be sure to write a thorough business plan so all of your investors can see that their money is well-invested.
While financing is one of the most common challenges that startups face, you can overcome this obstacle, get funding, and move your startup into the growth phase.
Whichever one of the challenges you face here, you want to act quickly to remedy the situation. Speak to your investors. Consult a financial advisor and see where you went astray.
Do what you can to fix your financial issues, but don't be afraid to ask for help. And, don't let your financial burdens drag out.
Take advantage of those who offer help, and you'll soon find yourself overcoming your financing challenges.
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