Hundreds of thousands of people around the world launch their own business each year. No matter how long the odds may be in terms of the likelihood of success, no matter how much of a risk it might be to leave a stable income in search of a dream, and no matter how much hard work starting a business demands, people still do it, and kudos to them for doing so!
If you're one of these people, then kudos to you, too! The congratulations end there, though, because you have to get to work right away. First of all, this means finding the startup capital you need to get your business off the ground — to find out where all of your most feasible financing options can be found (yes, this means not holding out for a lottery win), read on.
Self-financing
The easiest way to finance your new business is to finance it yourself. Doing so allows you full control of what you are putting into the venture, and it stops you from possibly being held to ransom by external forces. A major downside of self-financing your business, however, is the fact that if it all goes wrong, your money will be gone. So, even if you do have the funds to pay for the venture, think twice before you do so.
If you feel that self-financing is the best way to go for you and your business, then make sure to look into all the possible routes to go down with it. There’s the obvious option, tapping into your personal savings, which involves you injecting your hard-earned cash into the venture; there’s selling your personal assets in order to buy yourself enough capital, and there’s borrowing money against something that you own, such as your home. Depending on how much you have to play with, how much you are willing to inject into your business, and what kind assets you are either willing to sell or borrow against, you have to decide whether self-financing is for you or if you’d prefer to go down another, external route.
Asking for help from a loved one
One such external route is to turn to your loved ones for help. Whether it be in the form of a loan or a monetary gift, this is a viable route to take, and you shouldn’t be afraid of taking it. More to the point, you shouldn’t be afraid of asking for such assistance because, if your loved one has the money to offer you, then they will probably want to offer it to you to help you out.
Although not as easy as self-financing your venture, asking for financial assistance from a loved one is still easier than turning to an anonymous benefactor or your bank for it. This is because they will be easier to persuade to back you than people who don't know you will be. Also, you will, more than likely, escape having to pay your loved one their money back by a strict deadline, and you will avoid being crippled by interest demands from them.
However, do take care when you borrow or take finances from a loved one because misunderstandings over money can cause problems in even the tightest of family and friendship groups. To the point, if Uncle Joe asks for his money to be repaid, make sure you repay him if you don't want any disputes over Christmas dinner!
Taking out a loan
If you do not have the funds to finance your business yourself, if you do not have the assets to barter with, and you if do not feel comfortable asking for support from a loved one, then turning to a loan company is your next best bet. Doing so will see you circumvent the crippling interest rates that credit card providers attach to their loans, and it will give you some degree of freedom in regards to how much you can afford to spend.
You’re probably wondering what kind of loan is best suited to your borrowing needs. Your first option is an installment loan, but what are installment loans? These are borrowed amounts of money that are paid back to the provider over a predetermined timeline — the best thing about the end deadline is that you can play a part in arranging it. Therefore, if you don’t feel you will be able to pay the whole amount of the money you borrowed back within, say, ten years, then you can extend it and make the deadline longer. As long as you pay back fractions of the money you borrowed in regular installments (a legal requirement), you will be able to take out this sort of loan, which means it is perfect for new business owners who, like yourself, are unsure how their business is going to fair over time.
If you want to take out a loan that is far more business related, however, then you should turn to the Small Business Administration (SBA). They offer loan programs that are very much dependent on the success of the business that takes them out, meaning you could end up paying less in the way of equity investments should your business fail financially. Or, you could take out an SBA approved Microloan, something that provides specifically smalls loans for startups when they come to purchase the equipment and inventory they need to get themselves up and running.
Finding startup capital is often a task that is overlooked by new business owners due to their excitement and the fact that they have so many other things to do — but this is a task that you, quite simply, cannot overlook. You need to assess your own financial capabilities to see if you can afford to cover your initial costs, you need be brave enough to ask for support from your loved ones should you need it, and you should never be too quick to dismiss the possibility of taking out a loan. Doing any or even all of these things could help you to get your business up and running.
