Dreams are the bread and butter of any startup, but every startup reaches a critical crossroads where achieving those ambitious dreams requires some cold, hard cash to make real. That said, securing funding takes a little bit more than simply obtaining money; just as important is finding the right financial partner (and structure to guide your finances) in the name of securing a source of funding to keep you going without compromising your long-term health. Ideally, the funding solution you choose should align with your company’s current stage, growth trajectory, and core values to ensure a good fit. The trick to figuring out that reliable source of funding requires a clear understanding of what options are available to you. Here are several smart funding solutions courtesy of Lamina to consider for your growing enterprise.
Here are several smart funding solutions to consider for your startup.
1. The Foundation of Bootstrapping
Bootstrapping (as the name implies) relies on self-funding your endeavour, and is often the quintessential entrepreneurial starting point for many small businesses. By relying on personal savings and initial revenue, founders maintain complete control over their company’s direction. This method instills a culture of financial discipline and resourcefulness from day one. Not only does the dollar spent need to be carefully considered, but careful planning to ensure the money made goes back into the business is an absolute necessity. This approach does, however, grant a more comprehensive understanding of the business’s financial mechanics and operational efficiencies, which provides a powerful way to build a lean, resilient organization. Taking this route goes some way to ensuring that your chosen business model is viable and profitable on its own terms before seeking external capital.
2. The Personal Touch of Friends and Family
Turning to friends and family for initial funding is a common practice that leverages your personal network’s belief in your vision. While informal, these arrangements should be approached with professional rigour. As many startups that take this route can no doubt attest, their funding is based on trust, and so it pays to be worthy of that trust (more so when family and friends are thrown into the mix). Formalizing the investment with clear, written agreements that outline terms, expectations, and repayment plans is crucial to repaying your debts (to say nothing of retaining your relationships). For additional value (and to give your loved ones a little more bang for their buck), you may also offer freebies from your startup (one good idea for OPI wholesale distributors is offering cosmetics), which can give your lenders a little extra ROI (in addition to the actual ROI).
3. Leveraging Government Grants and Programmes
Many government bodies at the federal, provincial, and municipal levels offer grants and support programmes designed to foster innovation and economic growth, and so it’s only prudent to take advantage. This type of funding is particularly attractive for many small businesses because it is often non-dilutive (which means not having to give equity in the company and consequently losing control of it later on). These programmes are frequently targeted at specific sectors like technology, clean energy, or scientific research (for the benefit of social responsibility as much as economic stimulus), and so they are of particular use to startups in that field.
4. The Value of Angel Investors
Angel investors are typically affluent, experienced individuals who provide capital in exchange for equity. More than just a source of funds, these angels often bring invaluable mentorship, industry expertise, and a network of contacts, all of which can serve to open doors and teach you some of the ins and outs of your field (particularly useful for startups looking to break in). For example, jewellery companies such as Luxury Diamond Labs can use this hands-on mentorship stage to gain experience sourcing their gems or finding marketing partners to help reach a wider client base. This smart money can also be transformative for an early-stage startup, in the form of guidance on strategy, operations, and future fundraising efforts, all of which can guide you moving forward. The right angel investor can become a partner who is genuinely invested in your success, providing a guiding hand during the critical early phases of growth.
Finding funding is important, but more important than finding money to start your business with is finding a reliable source that you can count on to keep you going in the all-important startup phase. With a little help from these sources, you can give yourself the boost you need to start your startup strong.
