By Hunter Hoffmann, Head of US Communications at Hiscox Small Business Insurance
The spark of inspiration, that great idea, is the beginning of many small businesses, but turning that idea into something takes money. A lot of good ideas have been left to whither without the capital they need to become a reality. Sixty-five percent of small business owners believe finding financial funding for a new business is difficult according to Hiscox’s DNA of an Entrepreneur study.
Raising startup capital is one of the toughest parts of starting your business. Here are some tips to help you get funding you need to make your small business a reality:
1. Find some angels.
Most of the successful entrepreneurs you see on TV started out in the same spot where you are now– they had an idea and, but needed capital to make it a reality. Reach out to people in your network to help get funding from those who were once in the same position. Talk to everyone you know until you get a positive response or a referral to someone who can actually help you.
Angel investors are a great resource to help get your idea off the ground, if you can get their attention. These are usually accredited investors with a net worth of at least $1 million that invest in different start-up businesses and concepts. This doesn’t mean they’ll just throw money at any crazy idea – they get pitched all day and only choose a few select companies to invest in. Make sure your elevator is pitch tight and be ready to answer all the hard questions about why your idea merits their interest.
2. Follow the wisdom of the crowd.
Crowdfunding for small businesses has exponentially expanded the opportunities for entrepreneurs to raise funding. However awareness of this option remains low, 92 percent of small business owners polled in the 2014 DNA of an Entrepreneur study did not consider it as an option. Sites like Indiegogo and Kickstarter are a great tool for enticing pools of potential investors to send money your way. All you need is a compelling argument and you can begin to crowdfund your small business idea. Quirky and innovative ideas can do well here (somebody raised over $55,000 to make the perfect potato salad earlier this year) but a more ordinary project might have more trouble breaking through the clutter.
3. Break open your piggy bank.
Tapping your savings to fund your new business is the easiest way to get your business off the ground, but if you don’t have any money put away, that’s no help. The good news is you might be able to get your business growing and minimize the risk even without money in the bank.. Many successful entrepreneurs started their business while holding on to their day job for a period of time – even up to a couple years. . You’ll be burning the candle at both ends, so burnout is real issue, and your growth will be slower, but it is possible.. Going this route takes patience, and you’ll finally reap the rewards when you can actually quit your job and focus on your business full time and in full control without any outside investors.
Making sure your story is together, with the necessary documents to show you’re not just dreaming, is important no matter what the funding source. The more prepared you are, the more likely others are to get on board and help make your dreams become a reality.
Hunter Hoffmann is Head of US Communications at Hiscox Small Business Insurance and is responsible for media relations, social media, internal communications and executive messaging. Hunter lives in New York City with his wife and two sons – Walker and Otis. In his spare time, he moonlights as Chief Marketing Officer and deliveryman for Junior’s Fresh, a fresh baby and toddler food delivery service and cafe in New York City founded by his wife, Michelle.