Sources of Funding: Five Top Ways to Fund Your Business

An idea strikes your mind. You decide to start a business and sell your idea. But you face a giant hurdle. How to fund your business? 

Funding a business can feel overwhelming. But, worry not!

Here are the best methods of financing a business as suggested by experts.

1.Bootstrapping.

Bootstrapping refers to funding your business yourself. I believe you should always be the first person to invest in your own business. Not investing in your product gives out the idea that the person is not confident about the product.

Likewise, investing in your product will give out the impression that you believe in your idea and you are ready to take risks to make it succeed. The benefit of bootstrapping is that you have to convince nobody and it attracts more investors.

However, the drawback to bootstrapping is that you may not have plenty of money. Using all of your life savings is not that wise either.

2.Business incubators.

Business Incubators are resources designed to support businesses to look for a compatible investor. They help to formulate business ideas and prepare entrepreneurs to pitch their ideas in front of investors. Incubators can provide management training and even office space.

3.Family and friends.

This is one of the simplest ways of gathering funds for your business. While it might be complicated to convince other people to invest in your ideas, Family and friends will lend you money without hesitation. You will have to impress other people and you will have to convince them that the product will catch a market but it is not necessary with your loved ones.

Therefore, borrow money from your relatives and you can return it as soon as your business starts making a profit. Although it is convenient, it has some drawbacks. Like with bootstrapping, your family might not have much money and it is not a good idea to mix relations into businesses.

4.Bank loans and credits.

Bank loans are a really common way for funding your business and it might just be the most straightforward way. You take a loan and pay it back with interest with the money you make from your business.

Different banks have many different offers. Each offer has its perks and is tailored to meet the customer's specific needs. You should go through different banks and find the bank that gives you the lowest rate. You do have to convince the bank with a strong business plan if you want to receive the loan.

5.Crowdfunding.

It refers to collecting a huge amount of money from a crowd. Donors don’t have to be wealthy. Each person in the crowd donates a small sum of money. They are not investors so you don't have to return the money. Crowdfunding is becoming more popular by the day. You can do it over the internet and there are plenty of platforms you can use for crowdfunding.

Other methods like government grants are pretty good ways of funding but there is generally massive competition for them.