Starting a Business is tough. we’ve all heard the expression “it takes money to make money”. But that is easier said than done for aspiring entrepreneurs who may have a great idea but lack the necessary capital to make their dream a reality.
This is a point of frustration for many entrepreneurs, but even more of a struggle for minority entrepreneurs who often times lack the social networks that many tap when searching for those all important start-up funds.
While minorities may face their own challenges, this in no way should be a deterrent for anyone looking to launch their own entrepreneurial venture. We simply must seek out creative ways of securing the funds we need to bring that dream to fruition.
Here are 5 creative ways aspiring entrepreneurs can kick-start their potential million dollar start up:
1. Friends and Family
Family and friends are the number one resource most start-up businesses seek in order to get from point A to B. But remember, no one is going to loan you money on your pipe dream or “pie in the sky.” The key is to get all your ducks in a row. Approach friends and family like you would a bank, with a clear business plan, terms of the loan or investment, and even a PowerPoint presentation.Put everything in writing.
If you feel your circle of friends do not possess the type of disposable income that you need to fund your venture, then expand your circle of friends. Began frequenting places where successful people spend their time. At prominent social gatherings, fund raising events, and various volunteer activities. At each event make it a point to introduce yourself to people. Don’t be afraid to share your ideas, but don’t focus on closing a sale when you meet someone. Focus more on building a relationship. Someone may see your vision and believe in you enough to make the investment.
2. Social Lending
The Internet has added a layer to the world of new business financing. On social lending websites like Prosper.com and lendingclub.com, individuals can apply for loans from other individuals. The two parties set their terms and the website acts as the intermediary.
These sites are designed around the auction model popularized by eBay. As a borrower, you register on the website and post a loan request for a fixed amount of money at a maximum interest rate. Interested lenders then bid on your loan. When you find a lender that offers an attractive interest rate, you proceed with the loan.
The terms of the loans vary and are negotiated during the process, but all are unsecured loans, which require no collateral. Credit plays a factor when determine your rate, but poor credit does not disqualify you from being funded.