Starting your own business is an adventure. There is a huge amount of risk involved, and any decision you make could make or break your career as an entrepreneur. Every business needs a strong financial base. A number of aspiring young entrepreneurs today have fantastic business plans, great ideas; but no funding. When it comes to pitching their idea, they are absolutely confident, but when it comes to the funding, they run around like headless chickens. Any entrepreneur needs two things in terms of money: enough capital to start the business, and then enough capital to keep it running. There are a number of funding sources, each with its own set of pros and cons, which you may evaluate before choosing one approach.
Credit Card or Bank Loan Lines of Credit
While they are veritable credit sources, it is generally not possible to secure decent amounts from these credit lines unless your existing credit situation is already robust and/or you are willing to put up valuable assets as collateral. You could, however, get in touch with the Small Business Association (SBA) which would be able to provide you with consistent cash inflow without the hassles of usual backup requirements.
Barter Skills or Equity
This sort of business is not unknown, and is a rather simple way to get favors and reduce the necessary start-up capital. For example, if you are starting up an IT solutions firm in a new office building, maybe you could try trading a service like free maintenance for all computers rented by other offices in the building, in exchange for free office space. You could of course offer some equity stocks in your company in exchange for their services or some cash as well. This method however is largely subjective and most definitely not foolproof.
Also known as startup incubators, these firms provide all sorts of assistance to worthy startup ventures. These firms are usually affiliated to or associated with large companies, community development organizations and maybe even major universities. If you have an idea or a service with potential, they will be willing to provide you assistance in terms of consulting, office space and maybe even seed money.
There are a number of wealthy investors looking for the next big idea which could make them even richer. They key here is to secure an appointment with a big venture capital firm, meet the suits, pitch your idea to them and absolutely bowl them over. If they are impressed with your business and see some big bucks in it down the line, they will most definitely invest in your business.
This is the rage nowadays, with a new tale of a firm born out of a pure idea, admired by several investors, pooling in their resources to help it reach its start-up target. This method of funding has been accepted and ratified under the JOBS Act, and clear-cut success stories can be seen on crowd-funding websites like Indiegogo and Kickstarter. If your idea has the potential to appeal to thousands, millions of customers, your crowd-funding initiative could really pay off within two months or less!
There is no magic involved when it comes to business. You will need to put in a good deal of hard work to secure a robust funding mechanism for the business. However, reports indicate that the required start-up costs for most businesses are at an all-time low now, so you could in fact try bootstrapping, which is basically working the job you were already working, plus undertaking a few other projects to earn enough capital to fund your business yourself. This would mean you don’t need to depend on anyone, and can be absolutely tension-free.
Author Bio: Jim Woodford is a business guru who has founded and funded several businesses. After retirement, he has taken an active interest in the private finance sector, and now posts interesting articles about wealth management, entrepreneurial tips, and reviews of big firms like National Debt Relief on his blog.