Starting up a business can be really scary, especially when this is the first time you have had a brilliant idea that you want to get into to make money. But let’s say that, unfortunately, you don’t have enough funds. What do you do? Simple: do everything you can do. From simple e-begging to reading fundbox reviews. If you think it really is a good idea and would definitely turn a profit, then go for it.
But maybe you still don’t know what to do. Well, there’s the Internet. On the Internet are a few online funding schemes that can help you get the funding you need to start your business. Over the years, thousands of small start-ups have been successfully funded through these websites. But success comes with a price and each site has its own terms and conditions. But if you successfully follow these rules you can get the start-up money you’ll need to begin your business.
So which site should I go to?
First, you have to choose between ‘e-begging’ for money or getting a loan. Both have contracts and ‘terms and conditions’ but they differ in their models. Asking for money to fund your business on the Internet has a lot of strings attached. First, you have to tell people what you plan to do with your money. What is the nature of your business? What can it do for them? What can you offer back in exchange for the money? These all need to be defined. Once you do, there’s no turning back.
Once that is settled, you have to promote it to your friends or family. Get them to spread the word so people can chip in. Sites that let people beg over the Internet usually require you to set a “goal” amount. If the goal is met they give you the money, but not everything because they’ll charge you a small fee. Some sites don’t need to set goals and just ask for any contribution, big or small, it doesn’t matter.
Here’s the thing though – once you receive the money, deliver or not, you get to keep it. The only thing that hurts this model is the uncertainty that people will deliver their promises after they get funded. If you’re serious about your business and you show them that you’ll honor the promises you gave, then that’s fine.
Loans, on the other hand, are just that – loans. You ask for a loan, they negotiate how you pay it back, draw up a contract, and you get paid. It’s as simple as that. The advantage here is that, unlike the first model, the money is available fast. You can get it as soon as one or two days later. The drawback is that you’ll be paying it back, with interest. There are sites using this model with 12 or 24 weeks-to-pay versions. Some of them even reduce or waive some of the fees should you return the loan earlier.
One has no strings attached but it’s troublesome, takes too long, and doesn’t have any assurance that you’ll get funded. The other makes sure you can get paid the money you need, but you’ll have to pay it back. Sounds lovely, doesn’t it? But which model should you choose?
The answer – why not both? There is no law that prohibits you from following both models to get funded. But this is if you can. E-begging is usually more suited for businesses related to products and services that have a general audience, so it appeals to more people, which is a way to make sure you get funded. You may charge higher for specialized services, but the chances you’ll get funded remains uncertain.
On the other hand, loans make sure that you do get funded, provided you can pay back the loan. Some companies take information about you to check if you can really pay them back. Banks do this, so it is understandable if lending companies also follow this procedure before approving a loan.
Using multiple sites of the same model
Chances are, you are also considering right now the possibility of using two or three sites with the same model. While there is no visible problem using multiple e-begging sites, having a debt to multiple people is problematic. If they ask you to pay them back all at the same time and your business isn’t doing well, this is going to cause even more problems for you.
Here’s the best thing you can do – beg on multiple platforms while going for a loan with only one. This ensures that you’ll get more money for your start-up without too much risk. If you can find an audience and a customer base for your intended business, then that’s an even bigger bonus.
A word of caution about e-begging
The e-begging model relies solely on trust. Do not, under any circumstances, break this trust if you plan to beg more in the future. Like in any business, your name and your brand are connected. Lie or break their trust in any way, and you’ll never find another person willing to fund your plans. And this is the Internet – they never forget, and they’ll always find out if you change your name. Worst is that individuals might start fishing for more details about you, so keep in mind that being honest can prevent more problems.
Also, it is apparent that most of those who contributed are probably interested in seeing your product. This group of people can be the basis where you make your first loyal customers, so wasting this opportunity by being dishonest could kill your business forever. The promises you keep will dictate the course, so keep that in mind when you’re about to ask them.
Finding a way to fund a new start-up can be quite intimidating but once you get the hang of it you’ll be able to fund new ventures and new projects with ease. You don’t have to go to the bank to ask for a loan that may have to go through days of procedures only to get rejected. Just log in on the Internet, pick one of the two methods, and you’re ready to go.