I’m a small business owner who has successfully funded several start up projects through various methods. I now run two independent record labels, SHP Records and Latin Thug Records, and we release music and video titles via both physical and digital distribution, as well as licensing our catalog to third parties for music, TV, video games and other uses.
We were lucky enough to find a partner to fund our business initially who recognized the access to commercially successful talent we had and how it could help them build their business (they were a larger record label), while simultaneously building an additional revenue stream through their investment in our business. Everybody wins. We partnered together, they provided us funding, we gave them a share of our business and we were also compensated when we brought projects for them to release or helped them secure big name talent for their own music projects. Here are some other suggestions on how to fund your start-up business:
One of the best ways to fund a business is through government programs, most of which are administered by the Small Business Administration (SBA). This includes special bank rates, special programs with banks to offer these loans and rates and most of all support from professionals in all areas, including retired executives in your business area. For all the details, check out the SBA’s great website.
Work Within Your Current Business
Once you have an idea for a start-up business, a great way to fund it is to begin working in that same business. If your start up idea is a restaurant, and you are trying to fund it, perhaps you could start catering parties and small events. That way you can generate money while confirming you are a good cook and actually enjoy it. Or get yourself a job at a restaurant that serves similar food or operates in the area you wish to operate in, and see what that business is really like. You may find valuable information on how to run or not run your new business.
Although credit is needed for loans like SBA loans, people with good credit may have credit cards with interest rates under 10 or even 5 percent. If you only need under $15,000 to fund your business, this is something to consider, if your interest rate is low. Another bonus can be to accrue airline miles for all your purchases, some other kind of thank you points or even a small discount or cash back bonus. Credit cards can be used for non-tangible things like paying taxes and fees. Some companies may accept it for rent payments or other deposits for lease or space rental.
Angel investors. There are good and bad points to this, you may have to give up more of your company than the investment is really worth, so consider carefully. A bonus may be the experience or contacts that come with the investor, who may quickly and easily, be able to take your business to the next level merely from the people they already know and do business with.
Partner With Others
If you have a good idea, it may be good to find someone already in the business and make it a joint effort. This is kind of what we did when we started. This can also apply to vendors or landlords. Make your lawyer a partner in exchange for doing all the legal work. Give your accountant a share for handling all the tax matters. If the idea is good, you may be surprised at the value of just 1 or 2 points in your project. Using the example of the start up restaurant, you can approach landlords to be your partner in the business in exchange for free rent or other concessions.
These are just the beginning, be creative and just always try to be moving forward. If you believe in yourself and you really have a good idea, you can find a way to make it work. Even while you are trying to fund your start-up, make sure you are already working in that industry, always learning more information that can immediately work for you when you are running your own business.