Most important methods of financing projects and start-ups (explained 5 ways in 2021)

 Most important methods of financing projects and start-ups (explained 5 ways in 2021)

Most important methods of financing projects and start-ups 

You have an unparalleled idea that no one has ever applied? That's great, but that's not enough to start your own business or start your own start-up company, the biggest factor causing so many projects to fail; the lack of sufficient funding to sustain them.

One of the most worrying things about any entrepreneur after his idea has been tested is the financing or material support of the project.

There are plenty of ways to fund projects, and you have to choose what's right for you, so before you get excited about starting the project, think about how you're going to provide a source of money, or you're going to be disappointed with your inability to complete your project activities.

In this article, we will discuss the most important and popular methods of financing projects, which you can count on to finance an emerging project or company.

Most important ways of financing enterprises and start-ups

Although the search for project funding is difficult, it needs to be done to ensure the sustainability of your project, as explained in the introduction.

Financial support at the beginning of your project is also the fuel that will move your start-up company forward to achieve the objectives that it has set.

Often personal support for the project is stressful, and you spend all your money on your company.

Some entrepreneurs also said that their biggest mistake was to continue spending on the project from their own funds without seeking a source of funding.

Now here's the five most important ways to finance your project or emerging company:

1. Borrowing from banks

One of the most visible traditional ways of financing projects is to obtain a bank loan to start operational operations and manage project operations.

The entrepreneur will generally be required to provide personal security, and all personal assets will be pledged as security for the repayment of the loan.

However, since the 2008 banking collapse, the change in the banking structure and new regulations imposed on banks have made it more difficult for small enterprises to receive any form of financial support.

Additional advice: Try looking for banks that understand the quality and potential of small businesses, so it's easy for you to get a loan.

Remember: Banks are quite strict about loan repayment schedules, so you need to check your project plan, and the financial situation before applying for the loan so you don't get into any financial trouble.

2. Crowdfunding

One of the most important ways of financing projects is through crowdfunding. Crowdfunding is one of the fastest and safest ways to get funds for your project.

Why a? Because the donors who gave you the money won't ask you again, they just want the product or the service you promised... So how's the crowdfunding going?

Describe your company or project through crowdfunding platforms such as:

With Money

Kickstarter

Indiegogo

In crowdfunding platforms, anyone can give you money whether it's an ordinary person, an investor, or a businessman.

Some sources of crowdfunding that allow the public to acquire products exclusively to finance companies have worked with many of the giant companies we know now.

Professional advice: Do your best to attract people to learn more about your company and invest in it; As crowdfunding has become highly competitive, thousands of companies campaign annually to try to win people's sympathy and support.

Types of crowdfunding

1. Voluntary crowdfunding

There's no financial return on shareholders. Disaster relief efforts, charities and non-profit organizations usually benefit from such funding.

2. Reward-based crowdfunding

In this type there is a "reward" for financial contribution, often in the form of a product or service.

Reward-based crowdfunding campaigns are very popular among start-ups in their enthusiastic early stages of developing and testing fast prototypes for public opinion.

3. Equity-based crowdfunding

There is ownership in the company of shareholders - often investors - in exchange for financial contribution, and thus as shareholders; They get a return on their investments and a share of the company's profits.

Professional tip: Tell a story. There's nothing better than to tell a story that takes people's sympathy and sells any idea, even if it's not in business... Who tells a story, he has a powerful tool.

Storytelling is an effective way to strengthen your campaign on crowdfunding platforms, win people's contributions.

Tips for successful campaigns on crowdfunding platforms

1. Provide proof that your product has value: People should feel the great value your product provides them, otherwise they won't give you any money.

2. Promoting your campaign: After you post your campaign, share it on your social media accounts, share it with friends and family, and ask them to do the same, think about investing in a Facebook-funded ad.

The wider your reach, the more likely it is that investors or those interested in your product will see it.

3. Adjust if it doesn't work: If you don't succeed at first, try again, it's not the end. Small adjustments to your campaign can make a big difference to the money raised.

If your project is funded, make sure you keep any promises made by shareholders, because that will keep investors satisfied, and build credibility for future projects that you might want to support.

3. Venture Capital

People often confuse venture capital with the individual investor Angel  or. The first is a group of companies that invest and co-own their financial resources in an emerging enterprise or company.

The second is an individual investor, not a company.

To get an investment you can offer your project to venture capital companies for financial support in exchange for a contribution (property rights) to your company.

This certainly has benefits such as winning investors who can offer advice, and the kind of expertise you need to make a success of your business, given their constant work with successful and failing companies, so they've become very familiar with the market and what leads to corporate success.

However, one of the risks of venture capital is the competitive nature, which can make it difficult to persuade them to finance your company.

But the good news is that venture capital focuses mainly on fast-growing start-ups. It's often a lot of work and time - consuming effort to get the support you need, so don't give up or give up.

Advice for financial support from venture capital firms

1. Attractive product foot:

Investors see many products every day, many of which are copycat, and many of which have little chance of holding out, so you have to offer a product that gets attention at first sight. The investor must not come out of the room, which is determined to invest in your product.

2. Shorten your company's description in at most one or two sentences:

Your company's description should be succinctly comprehensive, and that's a hard equation I know, but try to train for it.

Don't forget that the investor doesn't have much time to hear about you and your project, so go straight ahead, and this strategy is used by Apple to convince the public about its products.

3. He was trained to pitch ideas in an elevator talk.

And it's a technology that imagines that you're with an investor in an elevator, so you have a few seconds to convince him to invest in your project, so what are you going to tell him? This exercise makes you focus on the points you have to mention about your project.

4. Business accelerators and incubators

One of the most common methods of financing projects is for entrepreneurs and entrepreneurs to join accelerators and incubators. It should be noted that accelerators were the reason for the existence of business giants such as Uber, Airbnb and Reddit.

Let me remind you of the difference between speeding and incubator:

1. Incubator

Provide support and guidance, but for the beginning; for example, identifying the right product for the market, developing an action plan, examining and dealing with intellectual property issues at this stage as well.

Incubators operate on an open schedule. It focuses more on the longevity of the start-up company and less on how fast the company grows.

In other words, the incubator focuses on companies that are starting out, and have an idea, but there's no plan of action to turn this idea into reality.

2. Accelerator

Support, guidance and guidance are provided to the start-up company and the micro-project, and accelerators operate within a specified time frame, usually lasting from three to four months.

During this period, start-ups build their businesses with the support of mentors and the capital provided by the accelerator.

At the end of the program, start-ups get an opportunity to offer their business to investors. The accelerator focuses on growing projects that already have a clear business plan and want to push themselves.

Accelerators are more selective in selecting the companies they support, for example: The Y combinator accelerator that I gave us just mentioned companies like Uber, only accepts 2% of companies that apply for support.

I think you have a clear understanding now of what the accelerator and the incubator are, and you can determine which one you're going to join based on the status of your project, is it in the beginnings or needs a boost to grow.

5. Government grants and support

There are many government support programs offered by the State to upgrade the economy, encourage entrepreneurs to enter the market because of the positive impact of entrepreneurship on economic growth, or even to support young people and innovators.

Such programmers may, for example, be irregular on a non-annual basis or set up once at intervals. It's important when you find these programs you can apply to.

Tip: Make sure you have an advance plan for your work, so it shows you're someone who knows the direction of the compass, knows how to act according to the data; Which could make it easier for you to get into these programs.

Some Governments have strict policies on how many staff should be on the project.

Also, business grants are a good opportunity to start your project, and these grants may be in the form of challenges, hackathons, or ideas competitions, which reward bright ideas with cash prizes (often these amounts allow you to start).

To learn more about these opportunities, look online in your region or state, you'll find many, or you can inquire about the quality of these competitions from local businesses to see what opportunities are available.

In conclusion:

Before you start your business or start - up company, make sure you secure enough money to start it up, and don't venture to fund it personally.

And after what I described to you in this article, it turns out that the methods of financing small businesses and enterprises are multiple, and surely if you have a good product that can compete in the market, then everything that's beyond that is easily accessible.

And now tell me which of these ways you like and intend to use if you have a small project?