Starting a new business can be a big investment, in many ways. Not only does it take creativity and big ideas, but it also takes a lot of money. In fact, big ideas can’t get off the ground without the financial backing to make it all happen. It’s a classic catch-22; you have to spend money to make it, but the more you spend it seems like the less you make. So how do you get the money to back your business without going into debt from the get-go?
There are easy ways to finance your small business that take planning, but can also help you to make a profit earlier in the game. The following ideas can help you to allocate your money into investing in your company, rather than simply covering overhead costs.
When starting a business, it’s common sense that you will have to have lump sums of cash on hand to cover costs and fees, and whatever obstacles arise along the way. Taking out a loan can help to get you that money, but you don’t have to take out a loan that immediately puts you back into debt; you have options. On the one hand, small business loans are helpful for businesses that are already turning a profit. The biggest benefit as a borrower is that you have more access to capital and longer terms.
On the other hand, you can take out a quick loan using your personal property to get your expenses paid off more quickly. If you own your car, for example, then title loans from TitleMax.com give you money quickly based on the value of your car. These loans have much shorter terms than small business loans and are not based on your business venture itself. This can be helpful in that you won’t have to start up your business in the red.
If you are in the development stage of your business, you might consider looking to an angel investor. According to Business News Daily, “Angel investors have been responsible for helping to start up several prominent companies, including Google, Yahoo and Costco. This alternative form of investing generally occurs in a company's early stages of growth, with investors expecting a 20 to 25 percent return on their investment.”
A big advantage to angel investors is their business sense. Many investors, because they are relying on your ROI, will be willing to advise and offer help to keep your business going in the right direction. The terms of this type of investment are often straight forward and give you the money you need upfront (most of the time) to cover the high costs of starting your business.
From the very start, you should be taking advantage of any connection you have, in any capacity. No matter how much or little, this can be a great way to get that extra cash towards your business. The biggest advantage to borrowing from friends or family is that you can negotiate on better (and less costly) terms than you would get from any financial institution. If it comes down to it, you can even make them a part of the business and offer them some form of contribution in exchange for their financial help. Having close friends and family is helpful, especially in the early stages of your business because they will be more willing to help than banks.
There are many ways to get your business off the ground; the best one for you will depend on your stage of development and what your short and long term goals are. As an entrepreneur, you know that you are in a risky and adventurous role, and it is always a learning curve. But no one knows your company better than you; and no one will be able to get things going but you. You may have to break your back to start a business, but you shouldn’t have to break your wallet.
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