Starting a business of your own may be a dream you’ve thought about for a long time. The complexity of it all is enough to make you think twice about actually doing it. Because there are so many things that have to be done in order to launch a startup successfully, it’s crucial to have a plan. That said, one of the most important things is having enough money to get started and sustain the business until sales take off. This can certainly be a mind-boggling goal that many never reach. For some ideas, here are several ways to fund a business startup.
Fund the Business Yourself
If you’re starting a small business with low costs, or have a growth plan that will go in phases, you could finance the early days of your business with your own money. Though this isn’t usually recommended by business experts, it is a viable option if you want to stay out of debt.
First, you’ll want to open a bank account just for your business and keep all money separate from your personal accounts. Doing this makes it simpler to keep your money organized and will make life less complicated when it’s time to file your taxes. Keep detailed records of all transactions and expenses you pay with your own money. You will want to pay yourself back this money once your business becomes profitable.
Use Credit Cards
You could also get a credit card for the business, and use this to pay for expenses beyond what you can invest with personal cash. This will also help you to establish good credit for the business, which will enable you to qualify for larger loans or vendor credit lines.
If you’re confident in your business plan and know you have a profitable future, you could pitch your company to private investors. You could start with people you know well, such as family and friends that have been supportive. Furthermore, there are many businessmen and women quite willing and able to invest money in up and coming businesses they deem worthy. Usually, this investment is in exchange for ownership equity or convertible debt. You can locate contact information for angel investors online or through your local small business administration.
Get a Business Loan
If your personal finances are in order and you have assets to put up for collateral, it’s likely you can get a bank loan for a business startup. Most banks will require you to submit a complete business plan and personal records for the past couple of years. Depending on the bank’s criteria for loaning money and the state of the economy, difficulty in securing a loan will vary. Unsecured business loans are a popular option, as these loans are designed for new business owners. You can use a broker to help you choose the right loan.
Choose a Business Partner
If you are not able to handle the financial burden of starting a business by yourself, consider adding a partner. If someone has been working with you to come up with ideas or has been supporting your efforts, ask if this is a possibility. Of course, a full partner will also share in profits along with the expenses. Keep in mind, this person can also be what’s known as a “silent partner” who doesn’t work in the day-to-day operations but will have money invested, be a part of the decision-making, and receives a share of profits.