3 Smart Ways to Finance Your Home Business

Starting a home-based business doesn’t require falling into debt. Savvy entrepreneurs should explore options to lessen or fully eliminate startup and ongoing costs. Utilizing reward-based crowdfunding, working part-time while maintaining a full-time position or attracting an angel investor are three smart ways to finance your home-based business.

Reward-Based Crowdfunding

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The popularity of crowdfunding sites, like Kickstarter and Indiegogo, afford an opportunity for interested investors to get in on the ground floor of the new business. From “regular folk” with a passion for the product or service provided, to serious high dollar investors, crowdfunding can generate a solid financial foundation for the newly formed business.

When establishing the fundraiser, offer tiered reward-based incentives which allow the sponsor to become invested in the business. The incentives should have deadlines, realistic expectations and meet the guidelines recommended by the hosting site. Starter levels can be as simple as a thank you card and product notifications. Higher levels can include one-on-one time with the owner or to be first in line to view, use, or purchase the final product.

Full-Time, Part-Time

For some, the prospect of leaving a full-time paid position before fully establishing a home-based business is daunting. Working part-time on the business offers a safe compromise. Scheduling time to work on the business, while also saving a percentage of a guaranteed salary, will reduce new business debt. When deciding on how much to save, start by reviewing or creating a personal budget. This will provide an approximate dollar amount of how much additional income is available to be set aside for the new business.

If the personal budget lacks sufficient funds to save, review the budget and make adjustments as needed to allow for greater savings. Standard monthly bills should be reviewed as a source of hidden savings. Internet, cell phone, and other similar bills can, and should, be negotiated.

Angel Investors

Entrepreneurs that have an established business plan, a roadmap, and a true passion for the product, should consider pitching to an angel investor. Angel investors provide a unique opportunity for upfront funding. When approaching an angel investor, presentation, and confidence in the business are of utmost importance. Prior to meeting with the potential investor practice the pitch, look for holes in the business plan that need fine-tuning, and have all necessary paperwork, samples, or materials ready. Solid preparation improves your chances for success. Angel investors are looking for passionate, motivated individuals, not those who are just looking to make a quick profit.

Investing in Education

If the above options don’t fall into your business acumen, additional education such as a business course or an MBA may be the next best step. Additional education, specifically an MBA in Business, has proven to provide a boost in networking, increase your earning potential, and assist in focusing a career path. When considering business schools take the time to compare private student loans. Finding the best loan with affordable rates will keep the prospect of a home-based business on track.

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