start small
you may not need a lot of funding right away. one option is to start slow with your own money while holding down another job.
chuck cohn did that when starting his tutoring service. he kept working and invested his own money into the business until he felt he was far enough along to quit his job. he suggests getting "as little funding as possible to get to the next level."
he referred to it as the lean startup, or basically only spending money on what's necessary. with some traction, you can prove your product or service is in demand and that you can deliver. having a business to invest in, as opposed to having an idea to invest in, gives you more ability to find startup capital.
determine your needs
before you set out to find startup capital, prioritize your financing needs. decide if they are short-term or long-term needs and if you are covering operating expenses or seeking funding for future assets such as property.
you want to make sure to seek the right funding to fit your needs. going after the wrong type of funding wastes your time and money. you can also lose control of your own business if you take the wrong steps.
where to find investors
when you have a firm business plan in place and can show some success, it's a good time to start finding startup capital. to find investors, consider the following:
- attend professional networking events.
- reach out to other entrepreneurs.
- consult a local company, organization or university with resources like consulting and startup cash.
research whether your city has an angel network or any angel investors. angel investors are often people willing to invest in startups. their help includes not only money but also advice and guidance as well. while angel investors may offer less cash than venture capitalists, the chances of attracting angel investors is more likely as you take the time needed to prove yourself and your idea.
as always, get it in writing. a promissory note states the terms, rights and obligations of the loan. that includes the loan amount, interest rate, repayment terms and other needed provisions.
ask family and friends
family and friends may provide you with smaller loans when you are finding startup capital. you can get money quicker and without as many contractual strings. there are still risks, however.
even with family and friends, make sure you have a solid business plan in place. do your homework, and make sure your business is at the business stage and not the idea stage. make sure there's a benefit such as interest on the money they invest, and, regardless of whether they are family and friends, have all parties sign a promissory note.
borrow money
david nilssen, ceo and co-founder of guidant financial, helps clients start up small businesses by using their 401(k) and individual retirement accounts. he says startups are a tricky investment because they usually have little value in the beginning. nilssen says entrepreneurs have to decide if they want to take on debt or use their own money. he says most startups are funded with some form of debt.
when borrowing, make sure to put all terms in writing. this goes for whatever the source. read over the terms carefully to make sure you agree and seek legal advice if needed.
community banks may be flexible to lend budding entrepreneurs some startup cash. you can also borrow money by getting an asset-backed loan, such as a home equity line of credit, or apply for a small business administration-backed loan.
government sources
when finding startup capital, use the sba's loans and grants search tool to find a list of financing programs for which you may qualify. these include low-interest loans, venture capital, and scientific and economic development grants offered by federal, state and local governments. government-backed grants are limited but may exist for very specific groups, organizations or activities, including businesses involved in scientific research.
use credit cards
nilssen says credit cards are the most common way a business is financed. going this route requires being comfortable with the interest payments and credit requirements.
credit cards are a good resources because they are:
- fast
- able to be used as needed
- able to be paid back when desired (to avoid unnecessary interest)
credit cards typically have more expensive interest rates than you will find with other types of loans. if going this route, look for the best rates. consider options including unsecured credit-line alternatives offered by visa and american express.
our small business center offers tips to help you as you find startup capital. we are also your destination for free legal forms including an investors agreement and a promissory note.
the biggest rule to follow as you are finding startup capital is, whatever the source, get it in writing.
this article contains general legal information and does not contain legal advice. 2022世界杯32强抽签时间 is not a law firm or a substitute for an attorney or law firm. the law is complex and changes often. for legal advice, please ask a lawyer.
