Starting your own business can be a rewarding challenge, but more often than not, the idea never gets off the ground. So what’s the best way for start-up business creation? While there is no golden rule for funding a small business, there are several techniques that myself and others have applied to a small business, with effective results.
Line of Credit
Credit is one of the easiest ways to get instant capital for your small business. It can also be one of the easiest ways for small business owners to get in over there head. Bank credit is a great solution for small startups that need a massive overhead in the beginning.
A six month calendar should be applied to your small business before you even begin. Will your company be expanding? What are the predicted profits and expenses? How will you repay the loan if your business fails? Answer these questions before you even consider a bank line of credit.
Business creation is all about the upfront cash. Credit cards can often supply your small business with some of the capital it needs. However, it can also quickly get out of hand. Credit cards with a 0% interest rate for the first year can help prevent the downward spiral that often occurs when credit is spent quicker than it is repaid.
I used a series of new credit cards with low or 0% introductory offer. I was careful not to spend too much on one card alone. This way, if I did need to pay the minimum balance when the offer expired, I would be clear from an overwhelming interest debt and I could focus on paying back one card at a time.
The small business association can help bring capital to your startup company if other lending channels won’t work with you. There are several loans options available, but you’ll need to confer with a banking agency about the details since the SBA does not lend money themselves. Instead private lenders lend the SBA the money and the SBA guarantees the loan. Visit the SBA website here for more details.
Small Business Grants
This is a great way to get the capital you need to fund your start-up company-but only if you open the right business. Unfortunately, it is only available at the state level and not all states offer grants. It is extremely limited when it comes to company types and is offered to specialized businesses only. To see if your business qualifies, check out the Business.gov website.
Many times, several investors or partners can help provide your small business startup with the capital it needs to get off the ground. With several investors matching your funds, you can easily avoid costly loans and never ending interest. The down side: partners and investors have a share and say in your business plans.
I had a partner in my first construction business and all went well. A few years later, I bought them out and I now control the company exclusively. Choosing a partner can be risky, so always do your research and make a contract you both feel comfortable with.