Where can a young entrepreneur get the startup funds needed to launch a business?
You’ve got the PERFECT product idea. Your budget is on point. Your logo could win a design award. You’re ready to go. Only one problem: you need some money to get your business off the ground, and you haven’t quite figured out how to go about getting it.
There are three main ways that a young entrepreneur can find the funds that they need to start their business:
1. Check Your Savings: Most young entrepreneurs that we work with have *some* kind of money saved up. Whether it’s a piggy bank full of allowance money, or a bank account where you have deposited birthday checks, a great first step is to add up all of the money that you, personally, have available. If you have enough to get started, we love to see kid entrepreneurs investing their own savings into the business. You’ll really feel like it’s YOURS and it will be so much fun to watch that pool of money grow once you make a profit.
2. Obtain a Loan from Family or Friends: If you don’t have quite enough money in that sweet piggy bank of yours, don’t fret. Asking family and friends for a loan or investment to get started is a VERY common way to get a new business off the ground. There are a few things to keep in mind when you do this:
Show your potential investor(s) your detailed budget, and ask for a specific amount to execute your plan. The more information you can provide, the more comfortable they will feel.
Be clear about when they will get their money back, and whether they will receive some type of interest or share in your business. Will you pay them 5% of your total profit at the end of your sale? Or are they willing to make an interest-free loan to help you get started?
If you are also planning to invest some of your own money, make sure to let them know. All investors like to see that the entrepreneur that they are supporting has “skin in the game” and will work hard to turn a profit!
3. Seek Funds from Outside Sources: These days there are several ways for aspiring young entrepreneurs to secure funds outside of their own network. For instance, as part of our LAUNCH Virtual Camps we provide a grant of seed funds (the $ you need to launch a business) to one entrepreneur in each session.
Many schools and neighborhood organizations run business plan competitions. Alternatively, consider a partnership with another business that could create a win-win scenario. If you are making homemade, fresh-fruit popsicles, could you seek a partnership with a local farm to provide all the produce? If you agree to advertise their business, they might be willing to give you a great rate on the fruit or let you pay them after your business has sold out.
Asking for money from other people can be hard - especially if you are on the shy side. The best way to increase your chances of obtaining money (and making it a less painful process) is to be prepared!
Don’t make the ask until you have done as much work as possible to show everyone involved that your business is going to knock it out of the park! Remember that an Investor will be much more likely to invest in your popsicle business while enjoying a tasty treat from your very first batch of product :)
Feeling overwhelmed by the process of finding funds, or looking for more coaching and practice? Check out our LAUNCH programs for additional resources and guidance. During our LAUNCH Virtual Camps, all entrepreneurs have the chance to pitch to live Investors for real seed funds!
Meet the Author:
Monica Lage is the Executive Director & Co-founder of Break Into Business. Monica holds a Commerce degree from Queen's University in Ontario, Canada as well as an MBA from Harvard Business School. Monica spent several years helping Fortune 500 companies solve their most pressing problems as a Management Consultant with The Boston Consulting Group. Throughout her journey she has sought out opportunities to share her love of business with young people, eventually pursuing Break Into Business full-time in 2014. Since then she has seen hundreds of young people flourish as entrepreneurs, all while raising her own three mini-entrepreneurs in Atlanta, Georgia.