Starting a business can be difficult, especially if you are in need of funding for your venture. A study conducted for the U.S. Small Business Administration (SBA) puts the cost of starting a business at $30,000. This includes all of the necessary registration and licensing fees that one incurs when starting a business, but may not necessarily capture all of the funding needed to sustain a business through its start-up and emerging phases.
There are various funding opportunities that are available to you when starting a business. Most entrepreneurs are not flush with cash or come from means that allow them to dip to heavily into personal resources. Generally, starting a business requires you to be creative and to look to a variety of financial resources in order to get your business going and off the ground. 5 ideas to help get your business off the ground include: taking out a loan, seeking investors by selling an equity stake in the business, taking the proceeds from a lawsuit to fund a business, launch a social media (“crowdfunding”) campaign and using personal resources.
Ideal #1: Taking out a Loan
A loan is a good option for funding a business, especially for those with good to excellent credit. Taking out a business loan can help your business begin creating a credit profile, which will become important as the business grows and additional opportunities present themselves that need larger amounts of capital to fund. A loan can be provided by companies that specialize in small business financing and banking institutions as well as guaranteed by a state agency or the SBA.
Ideal #2: Seeking Investors and Selling an Equity Stake in Company
You may find yourself forced to sell a portion of your dream to an outside investor in order to access the funds you need. Outside investors to consider as sources of funding include venture capitalists and angel investors. These types of investors look at a well thought out business plan and financial projection in order to determine the possibility that making an investment will result in a profit and the ability of the investor to cash out within a short period of time (5 to 7 years).
Ideal #3: Using the Proceeds from a Lawsuit
If you are engaged in any form of litigation, whether as the defendant in a lawsuit or are suing someone for some reason (i.e. breach of contract, defamation, copyright infringement, etc.), you may consider using the proceeds from the suit to fund your business.
Ideal #4: Launching a Social Media Campaign
Crowdfunding has become more en vogue as a way to help budding entrepreneurs launch their dreams. This idea, putting information regarding your product or service online and having those individuals within your social network help fund it, has taken the world by storm and provided opportunities for countless individuals. Crowdfunding platforms have proliferated over the past several years and are even the subject of a World Bank report looking at the global economic impact of this concept.
Ideal #5: Using Personal Finances
Borrowing from yourself is still always the best option for financing a new business. Although it is understood that many of us do not have the resources to fully fund our business endeavor, a good percentage of your initial funding will come from your savings, retirement accounts, life insurance policies and even credit cards. Using personal assets to finance your business may be necessary to get through the first round of expenses that you will encounter, understanding that additional sources may be needed to sustain your vision long-term.
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