Small Business Start Up Financing Succeed in your business endeavors. Click hereSMALL BUSINESS STARTUP FINANCING
Small Business Start Up FinancingSucceed in your business endeavors. Find out moreClick hereThe number one question I get asked as asmall business start-up coach is: Where do Iget start-up cash?Im always glad when my clients ask me thisquestion. If they are asking this question, it is asure sign that they are serious about takingfinancial responsibility for start it.Not All Money Is the SameThere are two types of start-up financing: debtand equity. Consider what type is right for you.
Small Business Start Up FinancingDebt Financing is the use of borrowed moneyto finance a business. Any money you borrowis considered debt financing.Sources of debt financing loans are many andvaried: banks, savings and loans, credit unions,commercial finance companies, and the U.S.Small Business Administration (SBA) are themost common. Loans from family and friendsare also considered debt financing, even whenthere is no interest attached.Debt financing loans are relatively small andshort in term and are awarded based on your
Small Business Start Up Financingguarantee of repayment from your personalassets and equity. Debt financing is often thefinancial strategy of choice for the start-upstage of businesses.Equity financing is any form of financing that isbased on the equity of your business. In thistype of financing, the financial institutionprovides money in return for a share of yourbusinesss profits. This essentially means thatyou will be selling a portion of your company inorder to receive funds.Venture capitalist firms, business angels, andother professional equity funding firms are the
Small Business Start Up Financingstandard sources for equity financing. Handledcorrectly, loans from friends and family couldbe considered a source of non-professionalequity funding.Equity financing involves stock options, and isusually a larger, longer-term investment thandebt financing. Because of this, equityfinancing is more often considered in thegrowth stage of businesses.
Small Business Start Up Financing7 Main Sources of Funding for Small BusinessStart-ups1. YouInvestors are more willing to invest in yourstart-up when they see that you have put yourown money on the line. So the first place tolook for money when starting up a business isyour own pocket.
Small Business Start Up FinancingPersonal AssetsAccording to the SBA, 57% of entrepreneursdip into personal or family savings to pay ortheir companys launch. If you decide to useyour own money, dont use it all. This willprotect you from eating Ramen noodles for therest of your life, give you great experience inborrowing money, and build your businesscredit.A JobTheres no reason why you cant get an outsidejob to fund your start-up. In fact, most peopledo. This will ensure that there will never be atime when you are without money coming in
Small Business Start Up Financingand will help take most of the stress and riskout of starting up.Credit CardsIf you are going to use plastic, shop around forthe lowest interest rate available.2. Friends and FamilyMoney from friends and family is the mostcommon source of non-professional funding forsmall business start-ups. Here, the biggestadvantage is the same as the biggestdisadvantage: You know these people.Unspoken needs and attachments to outcome
Small Business Start Up Financingmay cause stress that would warrant steeringaway from this type of funding.3. Angel InvestorsAn angel investor is someone who invests in abusiness venture, providing capital for start-upor expansion. Angels are affluent individuals,often entrepreneurs themselves, who makehigh-risk investments with new companies forthe hope of high rates of return on theirmoney. They are often the first investors in acompany, adding value through their contactsand expertise. Unlike venture capitalists,angels typically do not pool money in aprofessionally-managed fund. Rather, angel
Small Business Start Up Financinginvestors often organize themselves in angelnetworks or angel groups to share research andpool investment capital.4. Business PartnersThere are two kinds of partners to consider foryour business: silent and working. A silentpartner is someone who contributes capital fora portion of the business, yet is generally notinvolved in the operation of the business. Aworking partner is someone who contributesnot only capital for a portion of the businessbut also skills and labor in day-to-dayoperations.
Small Business Start Up Financing5. Commercial LoansIf you are launching a new business, chancesare good that there will be a commercial bankloan somewhere in your future. However, mostcommercial loans go to small businesses thatare already showing a profitable track record.Banks finance 12% of all small business start-ups, according to a recent SBA study. Banksconsider financing individuals with a solid credithistory, related entrepreneurial experience, andcollateral (real estate and equipment). Banksrequire a formal business plan. They also takeinto consideration whether you are investingyour own money in your start-up before givingyou a loan.
Small Business Start Up Financing6. Seed Funding FirmsSeed funding firms, also called incubators, aredesigned to encourage entrepreneurship andnurture business ideas or new technologies tohelp them become attractive to venturecapitalists. An incubator typically providesphysical space and some or all of theseservices: meeting areas, office space,equipment, secretarial services, accountingservices, research libraries, legal services, andtechnical services. Incubators involve a mix ofadvice, service and support to help newbusinesses develop and grow.
Small Business Start Up Financing7. Venture Capital FundsVenture capital is a type of private equityfunding typically provided to new growthbusinesses by professional, institutionallybacked outside investors. Venture capitalistfirms are actual companies. However, theyinvest other peoples money and much largeramounts of it (several million dollars) than seedfunding firms. This type of equity investmentusually is best suited for rapidly growingcompanies that require a lot of capital or start-up companies with a strong business plan.
Small Business Start Up FinancingSmall Business Start Up Coach provides value, inspiration and direction to entrepreneurialwomen starting up and launching small businesses. Accidental Pren-herÂ™ providing a placefor pren-hers to share stories, build community, and embrace their inner Samurai. Welcome!Article Source:http://EzineArticles.com/?expert=Susan_L_Reid