Startup Businesses - December 30, 2011

Starting a business is impossible without the appropriate amount of funding, but sometimes startup financing is not easy to come by. However, entrepreneurs determined to make their ventures a reality can find many ways to raise the necessary money, even in today's uncertain economic climate.

In 2012, there will be many new avenues that allow aspiring business owners to collect the money they need, The Huffington Post reports.

Crowdfunding is a financing approach that has grown out of the social media and online networking realm. Entrepreneurs can enroll in a crowdfunding platform that gives them the opportunity to explain why the money is needed. Complete strangers, email contacts and social networking "friends" can then contribute funds to the cause.

Contests are growing in popularity as a way for entrepreneurs to not only earn cash prizes for startup funding but also to gain exposure and foster connections.

Accelerator programs can also be an "outside-of-the-box" way to get a business off the ground. Typically, these arrangements provide aspiring owners with free office space, mentorships and the opportunity to present their ideas to investors. However, the programs also often require individuals to move to a set location for several months.

Entrepreneur magazine explains that businesses can create an environment where investors want to compete to be the first to support their ventures.

"There's a certain prestige in being part of the first group of investors, partners or customers to help launch a business," says the news outlet. "Create the feeling of exclusivity. Require an invitation to use your beta product. Generate buzz about your product plans and your team among blogs that investors read."

It is also possible to buy a business with retirement funds. There are several ways in which an entrepreneur can utilize IRA and 401(k) funds, but there are some legal steps that must be taken as this "isn't simply a choice of writing yourself a check," explains The Wall Street Journal.

Financial planners or third-party retirement plan advisors can assist individuals looking to tap this source of funding. In some cases, a C corporation can be set up that will establish a corporate retirement account, says the news source. Outside retirement funds can then be included in this plan, which then invests in the company's stock.

"Since the person is buying shares of his or her own business, he or she is effectively feeding it money," says the publication.