6 Tips on Funding Startup Business


One of the most overwhelming issues when starting a business from scratch is the financial aspect – you may have a great idea, skills and expertise, but it’s extremely tough if you have limited funds. There are various resources you can use, but before that you will need a strategy and financial discipline. Eight out of ten businesses are forced to close after only two years, says Bloomberg. Indeed, what people are least prepared for usually are the financial problems. Here are six tips on how to fund your startup business.

Estimate how much you will really need

businessp-lanningDetermine the initial costs – if you’re opening an organic food store, you will need to rent a space, pay for all licenses and permits, get an inventory, hire employees, and so on. Once you come up with a number, double it. Don’t be optimistic about when your business can start to be profitable. You will need to cover all expenses from your own pocket for at least half a year.

Cut some expenses

When you estimate the initial funding you will need, you may be truly overwhelmed. But there are ways to cut some expenses, so you can fit into a more modest budget. For instance, you can start your business at home, instead of renting an office. Another and very important thing to consider – instead of hiring experts on everything, you should be an expert yourself – at least in one thing. And a golden rule for every startup – hiring must lag behind the need. Stick to you absolute minimum, instead of hiring a lot of people, who you may later need to lay off.

Look at what options banks have to offer

Some people will say it’s almost impossible to get a loan from a bank these days because of the slow recovery of economy, bank regulations, risk assessment, and so on. But that’s not exactly true – banks actually want to give as much money as they can. Why? Because it means they will earn more, too. So, get your papers ready – your credit score should be almost perfect, and take your chance. However, consider how you will deal with the payments. If you really can’t afford it, a bank loan is a very, very bad idea.

Friends and family

When banks are out of the question and you still have no funding, the logical move is to ask your friends and family for help. But this comes with certain risks, as well – from ruining your relationship with them in case of failure to even lawsuits. That is why this is the funding option many people refuse to resort to. But there are different ways you can approach it – you can either ask them for money, or take your detailed business plan and offer them shares from the business. For instance, a friend of yours can buy a thousand shares at $1. This makes an investment of $1,000. If you’re not certain how it works, get advice from an expert.


If family and friends aren’t an option, look to crowdfunding – it’s basically the same, but this time you ask total strangers for help. There are many companies which offer this alternative funding such as Kickstarter, Crowdfunder and Indiegogo. But don’t think this is a piece of cake. You will need to actively promote your idea online – on social media, blogs, and maybe other websites, in order to get people interested in what you have to offer. While some people may invest $50 or even less, others will give you thousands. So, make sure your idea is original, creative and fun, so it can become viral.

Emergency fund

Once you have a business plan, funding, office and employees, you can start your business. But try to build an emergency fund – while you may or you may not save money on a regular basis (for kids’ education, vacation, or retirement), saving for your business is essential. The more money you have in this emergency fund, the safer and more resilient you are. Consider economy crisis, problems with the business, or critical investments you will need to make at some point. To be ready for all scenarios and cover all expenses, this fund is your best strategy.


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