Starting up your own business is a very stressful action. You have to figure out every detail ahead of time, and plan for all eventualities. People trying to start a business often run into problems when it comes to startup capital. The following are five ways to get that all important startup capital.
Savings
The tried and true method of tapping your savings for startup capital should be your first option. You know you want to start a business, businesses cost money. So start saving now so you have the money available to start your business. You will not have to pay anyone back, and will have the most freedom this way.
Family and Friends
Your family will always be there for you, and if they are financially capable may help you with a small loan to get you started. The benefits if borrowing from family are you will not pay interest on the loan, you can dictate pay back terms easier, and family us less likely to hound you if you are late. The major disadvantage is if the business does not work, you may not be able to pay your family back. A large company could absorb the cost; the financial impact on your family could be severe.
Partners
You may be able to find someone to provide the startup capital for your company if you offer a partnership. They may use their money to buy their stake in your idea, and may prove invaluable throughout the process. The pro here is you owe no one any money, and gained another person to help you through the entire process. The major con is you do not have full control anymore, and would have to run most aspects of the business past your partner.
Traditional Loan
Visit your bank and ask for a loan. Bring all your paperwork about your new business with you. You will have to sell your idea to the bank. They will want everything from cost analysis to feasibility studies. Come prepared. You may also look into refinancing your mortgage for the capital. The major con in this scenario is monthly payments and interest.
Investors
There are people out there that make their living investing in small businesses. Look for an angel investor or venture capitalist to invest in your business. The terms will vary between Investors, but realize these deals are set up to benefit the investor, not you. So read contracts carefully, and consult an attorney before signing anything. The good thing about Investors is they have been through the start up process before. They will help you with their wisdom and guidance as well as their wallets.
There are many ways to get startup capital for your business. Some may not work for you, and you may get declined often. Find something that works for your business and you will be in operation in no time.
