Happy Woman Throwing Money Above Laptop
Posted November 09, 2022
| Updated November 14, 2022

10 Tips to Making Startup Funding Work for You

Whether you plan to create a crowdfunding campaign, pitch venture capitalists or investors, take out a small business loan, or use your own savings, there are strategies to succeed in your efforts. Here we have 10 tips guaranteed to make your startup funding a success.

If You Seek Funding From Investors

  1. Know What Investors Want – If you’ve ever watched Shark Tank, you know a lot of startup founders come unprepared for what the Sharks want to know. It should be common sense that you have the numbers the investors will want, but still so many walk away empty-handed, even if they have killer ideas. Make sure you know your company’s valuation, past sales, and any major contracts you’ve secured before pitching an investor.
  2. Have the Right Business Structure – Creating an S Corporation is the best way to ensure your startup is attractive to VCs. They don’t want their own personal assets at risk, which is why they prefer to invest in S Corporations.
  3. Know Your Audience – If you don’t know who you’re selling to, how can you sell investors on the idea? Come armed with market research so you can identify your ideal customer down to that freckle on her nose.

If You Take Out a Loan

  1. Be Careful About Home Equity Loans – A lot of startup founders think home equity loans are an easy way to fund their startups, but think twice before you go this route. You’ll have to pay on that loan every month, whether your startup is making money or not, and that might be on top of your first mortgage. Can you afford it? Do you want to put your home at risk for the sake of your business?
  2. Make Sure Your Personal Finances Are in Order – If you plan to take out a small business loan and don’t have any business history to do so under your business’s name, bankers will look at your own credit profile, since you’ll ultimately be responsible for the loan personally. If you’ve filed bankruptcy in the past several years or have less-than-stellar credit, you might be denied.
  3. Handle Any Outstanding Business Dissolution Issues – If you have a past business that failed, make sure your business dissolution is handled before applying for a business loan. A business not properly dissolved still owes taxes and is a liability the bank won’t like.

If You Create a Crowdfunding Campaign

  1. Be Aware of What You Promise to Investors – If you opt for crowdfunding, be aware that the people who invest will be keeping their eye out for the pre-launch version of the product you promised them. If you can’t meet your promised deadline, you risk an outroar that won’t do your brand any good.
  2. Know That Marketing Your Campaign is Everything – People won’t magically find your crowdfunding campaign and donate thousands to it. You need an established marketing strategy for your campaign so that you spread the word among all your online and offline followers. You’ll need to communicate regularly on the crowdfunding page to keep people in the loop and encourage them to tell others.

If You Use Savings

  1. Get a Plan to Pay it Back – Your rainy day nest egg or retirement fund shouldn’t be in jeopardy just because you want to launch a startup. Pay yourself back just like you would an investor.
  2. Slow Your Roll Before Quitting Your Job – If your own savings is how you’ll bankroll your startup, you might not want to quit your day job yet. You need confidence that you have enough to not only cover your launching expenses, but also your monthly personal expenses, and you might be surprised how long it takes to reach profitability. Consider launching slowly while you continue to work.
  3. Each of these tips ensures that you position your business strategically to get the funds you need to launch and grow your startup.

CorpNet can help with #2 on this list! Creating an S Corporation is easy and stress-free when you let CorpNet handle it for you. Get started today!

<a href="https://www.corpnet.com/blog/author/nellieakalp/" target="_self">Nellie Akalp</a>

Nellie Akalp

Nellie Akalp is an entrepreneur, small business expert, speaker, and mother of four amazing kids. As CEO of CorpNet.com, she has helped more than half a million entrepreneurs launch their businesses. Akalp is nationally recognized as one of the most prominent experts on small business legal matters, contributing frequently to outlets like Entrepreneur, Forbes, Huffington Post, Mashable, and Fox Small Business. A passionate entrepreneur herself, Akalp is committed to helping others take the reigns and dive into small business ownership. Through her public speaking, media appearances, and frequent blogging, she has developed a strong following within the small business community and has been honored as a Small Business Influencer Champion three years in a row.

Explore More Blog Posts

Starting a Business in Retirement

Starting a Business in Retirement

About 4.1 million Americans will turn 65 in 2024, signaling the start of what’s being called the “Peak 65” zone. By 2030, all baby boomers (people born between 1946 and 1964) will have turned 65, a common age for retiring. While many people view...

Choosing a Business Structure

Choosing a Business Structure

Choosing a business structure for your company is one of the most crucial first steps to starting a business. Your business entity type has legal, financial, and administrative implications, so it’s important you get started with the best entity for your...

Most Popular Franchise Businesses

Most Popular Franchise Businesses

If the thought of starting your own business seems overwhelming, there’s an option you could consider to streamline the start-up process and make it more workable. Instead of starting from scratch to build an independent business, you could consider franchising....

Subscribe to Newsletter

Practical business and financial insights, lessons, perspectives, and know-how brought right to your inbox.

Thank you for subscribing!

100% satisfaction guaranteed or we will refund 100% of our service fees with no questions asked!