Are you ready to get your construction business off the ground but aren’t sure where the money will come from? This is a major concern for most startups, but there are plenty of options.
One of the biggest hurdles for any construction startup is equipment. It’s crucial you have high-quality tools, vehicles, and materials. If you don’t, you can’t provide the level of service required to succeed in this competitive industry.
In addition to equipment, you’ll need a small staff in the beginning. You’ll also need bookkeeping software. Your expenses are already starting to add up.
To help you out, we’re going over eight tips for acquiring startup funding. The money’s out there, you just need to know where to look for it.
1. Create a Thorough Business Plan
The most important first step is to create a business plan that details how you intend on making your business profitable. It will act as a guide for structuring your business and also play an important role in getting the funding you need.
Approaching investors without a business plan is a huge mistake. Without one, they won’t take your vision seriously.
You’ll also need to have a business plan when approaching banks for loans. They need to see you’ll have a way to make monthly payments.
When creating your plan, there are a number of things you need to include. Make sure you provide an outline of the services you’ll provide, your marketing initiatives, and revenue projections.
2. Try Bootstrapping First
Before you start looking for external sources of funding, consider bootstrapping to get things up and running. This technique involves using your own personal finances for initial startup expenses.
Bootstrapping involves using money from personal savings accounts, credit cards, or stocks. This can help you pay for equipment, office supplies, or a down payment on a truck.
The advantage of bootstrapping is you won’t go into debt and have to make monthly payments. However, it’s only a short-term solution meant to help you with initial expenses. You’ll eventually need to look elsewhere for funding.
3. Ask for Help from Family and Friends
Many people don’t feel comfortable asking for money from their relatives or friends. However, it’s a common practice and can be a huge relief in the beginning stages of your business.
Even though you’re asking for a personal loan, you should still show the lender your business plan. This will instill confidence in them that you have clear goals for making your business profitable.
This is another approach that allows you to avoid the pressure associated with getting a loan from a bank. Plus, if you’re lucky, a loved one may even give you the money as a gift.
If a family member or friend offers to help you out, make sure you fully understand each other. Establish clear terms for paying them back so you avoid tension down the road.
4. Equipment Financing
Because the nature of your work requires you have the right equipment and materials, opting for equipment financing is a great move. This means you’ll be able to get everything you need right away.
A huge benefit of financing is that lenders use the equipment as collateral. This means they’re very flexible when it comes to loan repayment terms and amounts. Plus, depending on the type of loan you get, it may be tax deductible.
In addition, it’s quite easy to acquire equipment financing. You’ll just need to have the right information such as a business plan, resume, and credit history.
You should also inform lenders more about how you intend to protect your equipment with techniques like stainless steel strapping.
In recent years, crowdfunding has become a popular fundraising strategy for entrepreneurs. This approach involves starting a funding campaign and distributing it via social media.
There’s a good chance you’ve seen or heard of crowdfunding. Sites like Kickstarter help people set up and distribute campaigns. They also make the process of donating money very easy.
When engaging in crowdfunding, it’s important to go into detail about your startup business. Let people know how you intend to use the money.
It’s also important to avoid getting too pushy. The last thing you want is to annoy people with your campaign.
6. SBA Loans or Grants
The Small Business Administration (SBA) is a federal organization whose goal is to help stimulate the small business sector. They do this by providing loans and grants to entrepreneurs trying to get their business off the ground.
There are a number of different loans available, so make sure you look into your options. The terms will vary, so find something that aligns with your business plans.
The SBA also offers grants for veterans, woman, and minorities. When pursuing a grant, make sure you understand all the conditions. Some require repayment, while others don’t have any stipulations attached.
7. Apply for a Business Credit Card
Acquiring a line of credit is a great way to pay for necessary things like tools, equipment, and materials. Plus, doing this will help build your business credit.
The right credit card will also come with rewards and points you can use to get discounts or even cash back. In addition, many business credit cards offer flexible repayment terms.
Like getting a loan, it’s important to research your options first. The last thing you want is to jump at the first chance to get a credit card and end up with unreasonable monthly bills.
8. Angel Investors
If you’d like to get a larger amount of funding right away, an Angel investor is a possibility. These are people with major capital who look for business ideas to invest in. They’re looking for businesses that will bring them a high return on their investment.
Many Angel investors will offer advice and mentorship in addition to their investment. They’re also ready to take risks on small businesses they feel have the potential for big returns.
Get the Startup Funding You Need for Future Success
The construction industry is very lucrative. Once you get your operation up and running, you’re on your way to serious profitability and growth.
Use the tips discussed above to get the startup funding you need to make your vision a reality.
Check out more articles for valuable financial information every startup should know.