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Where to Get the Money for a Business Start Up
Tisha Kulak is a writer for Creditorweb.com, where she writes about credit card offers, business credit cards and responsible credit card use.
There are more entrepreneurs moving forward and following their dreams of opening a business and operating a successful business of their own. While many have found success in starting up, most will face the all-important decision of how to continue to finance their businesses, especially if they are still in the early stages and require more capital to continue on. Here are some things to consider when searching for money beyond a personal savings account.
The Business Plan
This is the first consideration you need to make before even approaching anyone for money. You need to have a solid business plan that you understand and feel confident is complete. While you may have begun your operation without one, it is essential that you have a full understanding of what it takes to keep making your business work. People who give you money want to make certain you are not setting yourself up for failure, or at least a lot of struggle.
Factoring the Finances
Depending on the type of business you running, there are many financial factors to consider. You may already have discovered there is a significant period of time between starting out and making a profit and part of your business plan should account for that. You should also know how much of your start up funds will continue to contribute to your daily living expenses until you are able to procure a steady income. Monthly bills such as utilities, mortgage, car payments, and other fixed cost need to be combined with the variable expenses, including food and clothing and totaled for a period of six months. This also should be presented in the business plan – how you spend your money.
Adding to your living expenses, you will need to factor in all of the costs involved in maintaining and growing your business before you can determine the amount of money you need to borrow. Home-based businesses and services businesses generally have considerably less expenses than other businesses such as a restaurant or retail store.
Finding the Money
Once you have determined the total amount of money you need to keep your business going, you need to choose the best avenue to get that money. Entrepreneurs with excellent credit should begin with a trip to their bank. Schedule a meeting to meet with a loan officer at your regular bank. Bring along a copy of your business plan and make sure you know the details in your plan inside and out. Be professional and ready to stand behind your ideas.
Other options for specific start up business needs include:
*Commercial Financing* – These loans are provided to assist with the financial needs of a new business, including working capital, inventory purchases, account receivable, and payroll. Commercial finance loans usually require assets as collateral.
*Real Estate Financing* – These loans are provided to assist with the new construction or the purchase of a building for business purposes.
*Equipment Leasing* – This type of financing is to assist with the purchase of equipment needed for the business.
*Small Business Association Loans* – The SBA does not provide loans, instead they help guarantee a loan, using funds provided by the US government to provide working capital for small businesses. There are several different programs available and you are still required to be creditworthy in getting a loan from a bank or other financing source.
*Credit Cards* – The reality of small business start ups is that many of them are actually started on credit and to some extent, grown on credit. Entrepreneurs, who may not have credit good enough to get a loan but still have personal credit cards, often opt to finance their business ideas on credit. Unless you know that you can easily make the monthly payments and have a solid plan to have the balances paid off in a certain period of time, using credit cards to finance your entire business is not recommended and could lead to major financial roadblocks down the road, especially if you further damage your credit.
Outside Investors
* Family & Friends – If you are fortunate enough to have people
you are close to you who want to invest in your business, make
sure any dealing is done in writing and even better, under the
direction of an attorney.
* Professional Investors – There are several businesses and
individuals who are in business to invest in your business. Taking
this approach requires a lot of time, research and effort. You
need to have a dead-solid business plan and be completely
motivated to see this option through until the end. Investors are
very precise about where they put their money and you need to be
on your game way before you approach one with your ideas.
Growing a business is definitely not a walk in the park. You must continue to strive towards the goals you have set for your business and stick with it , giving it your all. It will be one of the most fulfilling adventures of your life. Don’t be afraid to seek advice from others who have also started out at the bottom and have found success of their own accord. The resources and the information you get from a person who has been through the process can be invaluable.
21 Comments
Clix Startup-Business Bargains said on June 9, 2008
Hie
For the uk readers we have The UK Angel Investment Network which is an Investment Network,or platform connecting entrepreneurs with angel investors. It can be found at angelinvestmentnetwork.co.uk/
Just google angels investors, and you will come up with several.
Hope this will help.
Chings
http://www.writingfortune.com
Leoj said on June 9, 2008
Nice blog.
Very informative and helpful.
I know a software that you can use to c\make an excellent and effective text ad. It is called glyphius.
avin said on June 9, 2008
Great post. This is great information that can help assure young entrepreneurs that there is a way, one way or another, to fund a great idea.
Thanks for the excellent content!
-avin
jericho_ella said on June 9, 2008
It is a very helpful informational content that every business men and women will enjoy reading…. it worth reading not a waste of time…
good job…nice posting.
sheila said on June 10, 2008
As an incoming entrepreneur, this blog really “rocks”.
The facts are easy and practical and builds a beginner’s confidence to take the risk in venturing his/her own business. It’s a valuable material that I’ll personally apply in my soon to be business.
I really appreciate this post very much!
Justin Nowak said on June 10, 2008
Thank you sheila for your kind comments, and good luck to you!
Money should never be the issue, if your idea is good someone out there will see that and provide you with the money. Bartering services also works really well if you are cramped for cash.
The other option is to give away equity, as my good freind Joey Pomerenke likes to do!
Kate True said on June 10, 2008
I’m a young business person myself. I really enjoyed seeing all the helpful info in this blog. I looked into the software Leoj recommended called Glyphius, its really a great system. Check it out, chances are it could hep you as well. Thanks for the suggestion.
Srle said on June 11, 2008
When it comes to write a professional Business plan, supercharged writing skills are in your hands. Are you ready to begin scrutinizing your income generating copy? Escape the nightmare of guesswork 100% Guaranteed!
• Glyphius
sheila said on June 11, 2008
In establishing my own business, I am not only creating profits but creating employment as well. I know that it’s too good to be true but honestly, I want to help people who are less fortunate so that I could uplift them even in simple my own simple ways.
And your absolutely right Justin, money is not everything, it’s about how you spend them.
:)
nita said on June 12, 2008
I’m a young business person myself. It was very informative.
This is great information that can help assure young entrepreneurs that there is a way, one way or another.
Mike Michalowicz said on June 12, 2008
Rock solid post!
nikkig said on June 12, 2008
Hello,
I enjoyed reading up on this helpful information. This has inspired me to being more motivated to start a business. There are many opportunities out there that can help with sales like Glyphius. It’s a great way to improving your sales and there are great testimonials that can help you to understand that it is not a gimmick. You can have the ability to have a more profitable business.
nikkig
Val said on June 14, 2008
Hi. Interesting comments. It’s true that starting your own business is stressful enough. You can make things a tad bit easier with Glyphius -an easy- to- understand software for business professionals.
Ron Meledandri - Sentra Business Solutions said on June 14, 2008
Good article on raising money for your business. One thing I would add is to consult an attorney BEFORE asking anyone to invest in your business. There are various state laws which regulate such requests as well as to protect the business owner form getting into a bad deal. Keep up the good work.
Meg said on June 15, 2008
Good tips!
Steve said on June 20, 2008
Not trying to spam, just happened to be related to something that could help some grow their business: subjectstime.com. This will work for some, for some will not — that’s the life )
B Smith @ Wealth and Wisdom said on June 21, 2008
Great post. Just a couple things to think about:
-Business plan: for most businesses a one page plan is the best approach. It is a usable tool (most collect dust) that can be built quickly. Instead of wasting a ton of time and money on puting together a phone book sized tomb focus your energy into your customers.
-Finances: If you are not debt free you have no business starting a business (no pun intended). The additional stress and strain is not worth it and the debt ads a significant level of risk. Also, if you can’t manager your personal finances how are you going to manage the complex accounting of a business?
-Raising money: one option many people overlook is starting small and run your business on a shoestring. This forces you to innovate and be more efficient. Also, having investors ads a layer of risk and stress. A startup is risky enough. Why magnify the risk?
Amit said on July 7, 2008
Wow, nikkig’s post seems a lot like spam. Anyone else get that feeling?
Gregg Blanchard said on July 15, 2008
Good stuff. Personally, I frequently resort to solopreneurism and “small potatoes” business simply because the task of rounding up a big wad of financing for a startup is daunting. Thanks for laying that out, looks like a good base for understanding the steps required.
David said on July 29, 2008
Неплохо
Peter said on October 5, 2008
Searching for money is so much easier if you have a sound business plan and not just a dream. Good information, thank you so much.
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