Many Americans bear witness, from their experience of working the traditional 9-5, that it’s near impossible to realize a dream of financial freedom by depending on income from this source alone. As a result, more small businesses have sprung up in the past few years than at any other time in history, as entrepreneurs just like you take the steps towards a stable financial future.
There are things you’re going to need, however, before you start. You have to pen a business plan or model, find a location (unless you’re planning on working from home), and set about financing your plan. A comprehensive business plan will be the key to securing any type of funding. So make sure it includes everything from the major points like business objectives, market analysis, services, marketing and management to the smaller points like the company name, the logo, the color scheme and even what will be the design of your business checks and business cards. In today’s modern age, appearance plays an important role in decision making, so it’s vital to represent your company in the best way possible.
Now that you’ve written a business plan that cannot be rejected, it’s time to focus on getting the necessary funding to make it a reality. In the following, you’ll be introduced to several ways to get your hands on the capital you need to make your dreams come true.
1. Proven Idea? Consider an Angel Investor
There are people walking around out there with considerable funds not knowing where to invest it. You’d be surprised how many are willing to invest capital in a new business. But keep in mind, they’ll expect a return. So, if you’ve got the next big idea, or perhaps a small idea, you might want to seek out an angel investor. They will want control of the company, in terms of percentages, so make sure they’re willing to exchange expertise in the area so that you can both be successful.
2. Small Business Loan – Federal Provision
It’s common knowledge that the federal government will guarantee small business loans for a variety of different classes. For example, the General Small Business Loan 7a Program may guarantee a loan for your business if you quality. Your business must operate for profit, it must be located in the United States, it already has to have a modicum of invested equity and other. Check out the website for the loan application checklist to see if you qualify.
3. Crowdfunding is an Option
Unless you’ve been living under a rock, then you’ve certainly heard of crowdfunding and major platforms such as Kickstarter and GoFundMe that have really made it easily available to the masses. Keep in mind, however, that you’ll need a compelling story for the latter (GoFundMe), given the plethora of people that use it.
Kickstarter, on the other hand, is more oriented towards business ideas, so if you’ve got a good one, then you could find many people willing to pitch in a few dollars to help get you off the ground. And if news of your idea goes viral, then you could literally have millions of dollars at your disposal to use towards breaking into the competitive marketplace.
4. Credit Cards and Unsecured Loans
Credit cards are unsecured loans, which means that you don’t need to put collateral up to receive a line of credit. If you’ve got a good credit history, you could be eligible for low interest loans from the same lender. If you have a business in mind, it’s best to pay down your credit cards first so that you have those lines of credit available; additionally, you’ll get better rates on personal and business loans. It’s a viable option for business promotion and purchase orders – at least in the beginning. You’ll likely need more as time wears on; this is where the other methods of securing capital come into play.
5. Mortgage – Borrow Against Your Home
This is yet another viable method of securing the amount of financing you’ll need for a business. 28 million small businesses currently in the U.S. did it this way, because the amount of starting capital is often higher than you would initially think.
This is why having a business plan/model in effect is necessary. If you don’t have enough to self-finance, then a home equity line of credit (HELOC) is possible if you’ve got at least a 20% ownership stake in the house. There are various terms involved, so make sure you understand them and consult a lending specialist before going through with it.