The business world is open to everybody who has enough funds to start them. However, securing these funds can be pretty challenging, especially with the pandemic still around. Therefore, you need to be creative to secure the necessary funds for your business. Thankfully, here are three innovative strategies that can help you get the necessary funding you need for your startup.
1. Crowdfunding
Finding funding for a business can now be done through the internet, and many investors are willing to give you money for it. So if your company has an attractive idea, enough to bring in investors, crowdfunding is for you.
Essentially, crowdfunding puts your business or project on the internet for everyone to see. You then put how much you need to start it. Investors can then pledge any amount of money they want. They can then get the product you’ve pledged alongside any other things you’ve put on offer.
It’s a smart way to start a business, especially if you’re only selling one particular item. Statistics have shown that over $17 billion have been generated from crowdfunding. But it only has a 22 percent average success rate. This success rate increases the higher the funding. This means that this option does require a bit of marketing on your side. If you don’t reach your funding goal, your pledge might not become a reality.
There are also many other downsides to crowdfunding, one of them being the random nature of the world. Some investors you might have aren’t going to give you lots of money simply because they are just interested in your product. So don’t expect them to continue funding your business forever.
Many platforms can help you crowdfund. The famous one is Kickstarter, but other crowdfunding sites such as Indiegogo and Fundly might be attractive for you, depending on your business goals. Indiegogo does not require an end date, so funders can continue to support you for as long as they want, and Fundly is great for NGOs. So choose the right crowdfunding platform if you want this to work.
2. Pre-selling
Next in line is pre-selling. Pre-selling is a common tactic used by businesses planning to sell one product in its lifetime. This means that the businesses that do this have short lifespans. However, specific industries thrive from pre-selling, such as gaming and real estate.
Pre-selling happens when goods are sold to certain consumers without being available to the public. It’s great for testing the waters and getting the necessary starting funds to create more products.
You might have seen this tactic being used in the real estate industry. Agents sell properties that aren’t fully developed yet at a much lower price. This is all to make the product as attractive as possible to secure the funding needed to drive the project.
Indie gaming studios and even big gaming companies do the same thing. But, instead, their product is video games. They release a game on early access and let a few people purchase it to try out their game before it’s even finished.
Pre-selling is a smart tactic that works well if you only have one product to sell, and that product should be attractive. It can be better to secure funds than crowdfunding because the product already exists when you pre-sell. Your consumers already have a basis whether they should give you their money or not.
3. Refinancing
Loans can be one of your greatest assets. Your mortgage loan can fund your business dream once you refinance it. Many smart businessmen do this, and although it can be risky, the potential reward is worth it.
Once you’ve paid about half of your mortgage, you can gain access to refinancing. Refinancing your mortgage is fairly smart and is a good tactical decision if you want to reduce the interest rate of your existing loan. However, business owners also do this as a way to inject funds into their business.
It’s estimated that you can reduce the interest rates of your loan by 2 percent on average through this tactic. Through this, you can start saving up money to start your business. You can also opt to do a cash-out refinance, which can give you the money you’ve paid for your home. This is great if you need the money right now to start your business.
However, be careful with refinancing because it might not be favorable in your current position. Those who can’t pay the refinanced version of their loan shouldn’t refinance since this will add more burden and pressure.
So here are some creative ways you can gain the necessary funds to start your business. These are relatively simple ways, and you have access to them, so make sure to take advantage of them whenever you can.