While a great idea, a needed service or product, and a known area for marketing are all very important, let’s face it…getting funding for your business is critical. Most businesses will start up with investments made by the owner, but often, that will not be enough to insure success. However, there are several ways to find funding to help you begin your venture.
The advantage to using your own money is that you have to answer to no one but yourself. You will not have the added stress of disappointing or hurting the people you borrowed from. You will, however be risking your savings and credit standing. Here are some tips for getting funding on your own:
- Save enough to last a full year on your own before starting.
- Take cash from your credit cards.
- Take out a home equity loan.
- A small business loan can be used for buying necessary items to keep your business going. They are not difficult to get if you have good credit, and have a bank that you’ve done business with before. If the business is brand new, you probably will have to personally guarantee the loan.
If you need to work with others to come up with enough to start or maintain your business, you still have several choices:
- Venture capitalists will usually invest in a business that is past the early stages of development. In order to get it at the start-up, you would have to come up with an amazing business plan for a much needed product being clamored for by a needy public. Hundreds of thousands of businesses are started every year, and less than one per cent of them are considered by venture capitalists.
- Limited partnerships are those in which you have someone who is willing to invest and share the liability of debts made by the business, but only for the amount of their investment. They have nothing to do with company obligations and have no management involvement, but they are entitled to a share of the profits.
- Angel networks are groups of private individuals, who invest in your new business. They look for businesses that have the potential to grow quickly and give them ten times their investment within a three to five year period.
- Store credit and vendor financing can get you leeway in paying their bills, bill stretching out payments from one to six months.