It always does seem like an uphill climb when you want to start a new business, doesn’t it? You’ve got worry about planning, pricing, the building, the name, the equipment, the timing…. And then, of course, the funds.
That’s the big one. The others sounded stressful enough, too; nothing, though, beats the idea of having to need the money just to start it all up. It’s not like you have that trust fund sitting in your backyard waiting to be spent on your new hot dog stand.
So What Do You Do About Having the Necessary Capital?
At first, it was a traditional method to obtain grants, especially from the government. These days, though, you have other options, and that’s a good thing.
Why? Regulations are tighter, competition is stiffer, and money’s less and less available with the government. Chances of you landing that grant are a lot slimmer these days, so what can you do? You can….
Reach Into Your Own Pockets
By now, you’re probably throwing your hands up. Maybe you don’t have a lot of money. Maybe, though, you have some money; and that’s all that will matter.
The fact is the U.S. Census Bureau in 2012 accounted for 60% of businesses utilizing personal savings just for starting up. Those little accounts do help; they do make a dent. Moreover, if your business does happen to crash and burn, what do you lose? Your savings. That’s the lesser evil, really.
Maybe, though, it’s still not enough with only $50 in the checking account, and we understand completely. You’d be surprised, though, just how deep your pockets might be. I’m talking about leveraging your own house if necessary. Go through a personal home equity loan, and you might just get off on more than the right foot. Try both feet. It is risky, though. After all, if you business goes under, so does your house.
Banks Are Still Around
Sure, the grants are great, in that you don’t need to pay those back. But there’s an alternative: bank loans. Statistically, 10.7% of companies receive funds from bank loans, and they use those loans well.
Understand, though, that there is a process involved. You’re basically borrowing money from the financial institution. It’s not going to take only a handshake to make it so. You’ve basically got to prove you’re worth every penny you’re borrowing.
Moreover, shopping around for the best loan might not be a bad idea. Banks compete, so take advantage of that. You’ve got varying interest rates, closing costs and terms to look at. Plus you might want to get some sort of foundation going with your business possibly before trying to obtain a bank loan. That ensures you have the collateral to back up the agreement.
Look at Interpersonal Loans, Too
There are more types of loans? Yes, there are. However, these types can be slim but definitely more beneficial to you. What are they? Basically, money borrowed from friends and family.
Before you scoff even more, understand that statistically you’re looking at about 2.6% of corporations out there practically borrowing money from family and friends just for startup costs. When you look at the grand scheme of things in the U.S., that’s not a bad number for some companies thinking it’s a good idea. It does help.
Approach this type of loan, though, as an actual ‘business deal.’ Your mom or dad aren’t simply doing you a personal favor. They’re providing a strategic avenue of corporation action. This, however, doesn’t mean they’ll obtain a specific investment in your company unless you state it in some contract, but be sure to put the actual transaction — the loan, per se — in official writing.
And Then There’s Crowdfunding
There’s nothing wrong, basically, with going door to door. However, that prospect just got a lot easier with the rise of the Internet. You can basically go to every digital “door” you want without feeling queasy or having that giant wooden panel slam on your face.
Sites like Kickstarter or Indiegogo can be excellent ways to amass plenty of funds as long as you know how to sell your idea to the residents of the United States — and quite frankly anywhere else given the global reach of the World Wide Web. Raise money. It’s possible. Plus there’s no need to pay any of it back.
Partnerships Can Help
Of course, consult with your business lawyer about partnerships, because there are some legalities involved. When there are two or more people working together, though, you get better prospects of obtaining more resources for startup.
You’re still subject, though, to taxes, regulations and other such concepts like government inspections. You’re an operable business, subject to all those guidelines under business law, but at the very least, you’d be working with someone equally vested in the idea and business of your dreams. Ensure, though, that the partnership is equitable and fair — or else it might go up in major flames.
When the Going Gets Tough….
Like I said, when it’s an uphill climb, it can be — but the tough get going when they have the right climbing equipment. These are tips representing the right equipment, for sure. You’re also not subject to some of the massive red tape the large corporations have to face; however, those are the businesses standing at the top of the hill. If they got knocked down, though, it’s a long drop.
Ensure, though, that you’re not in the way when you’re climbing! Otherwise, happy fundraising, and godspeed to you and your business.