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How Young Entrepreneurs Can Secure Funding for a First Business
No matter how good an idea sounds in your head, you won't get anywhere without funding. Even Donald Trump secured funding from family and friends before launching his empire, and while investors are one way to get your business off the ground, they are not your only option. As a young entrepreneur, you can borrow money from friends, loved ones or investors, make extra money on the side, take out a new business loan from a bank, or ask for donations online.
Working with Investors
An investor is someone who gives you a specific amount of money in exchange for a portion of your company. You might give the investors stock in your company or guarantee that they will receive a portion of your business profits. Before you begin looking for investors, you need to decide how much money you need and how many investors you want to take on. You can then look for investors online, find them through local business organizations, or ask family and friends to invest in your business.
Borrowing money from the bank is only a good option if you have a high credit score and a good credit history so you can secure a low-interest loan. You might consider talking to your current bank, as it knows your credit history and may offer you a lower rate. The U.S. Small Business Administration (SBA) can also help you secure a loan. The SBA also has grant programs available for qualified applicants. Unlike a loan, you don't need to pay back a grant.
Making Money on the Side
Working a second job gives you the chance to earn money that you can put in the bank or a mutual fund and reserve specifically for your start-up costs. A part-time job as a waiter or delivering pizzas can help you earn a few extra hundred dollars a week toward your business.
Turning to the Internet
One of the newest ways to secure funding is on the Internet. Kickstarter is one of the better-known crowdfunding Web sites, but Donald Trump started his own, FundAnything, to help people raise money for their businesses. These sites let you reach millions of people at once and accept donations ranging from just a dollar to thousands. With business software, you can keep track of the money you raise and see where each penny goes. Kickstarter and similar Web sites even let you reward those who make donations. For example, you can give your benefactors clothing or office supplies branded with your company logo. Crowdfunding is one of the best new entrepreneur tools in your arsenal because it lets you reach those interested in your idea, who not only donate but will then help spread the word about your business.
As a young entrepreneur, you know that raising money is the one of the most important steps for getting your business off the ground. These suggestions are a great starting point to help you get the amount you need.
For more information, check out The Young Entrepreneurs Toolkit page.
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