Starting a business requires working capital and the knowledge of where to get it. Entrepreneurs have several options available to them when it comes to finding the money they need to operate their business. Most know the obvious solutions, but there are other ways some don’t normally think of as possible resources.
- Banks and Lending Services – Business loans are the what most people think of when looking for start up funding for their new endeavor. There are several factors that come into play when researching this type of financial resource. Personal credit scores may be looked at, as well as personal and professional references. Banks and lending institutions that specialize in small business loans may also require collateral until the company has established a positive credit history.
- Private Investors – Private investors, sometimes called “angel” investors will offer a set of amount of venture capital for a percentage of the new business’s profits for the first few years. Most private investors are financially secure to the point that if a loss is incurred it does not cause them a financial hardship. Most investors, however, will offer advice and mentor the new company’s management. By doing this, they not only protect their investment, they are guiding the new business owner’s to stand on their own. The resources an investor provides are not limited to funding. They can also offer benefits in the way of networking, advertising and other types of marketing as well.
- Friends and Family – One of the most overlooked financial resources is a new business owner’s friends and family. If the venture has a bright future and the new owner can guarantee a return on their investment, it might be a good idea to ask friends and family to invest or buy into the company. Much like an angel investor, a relative or friend who invests in the business would be expected to receive some type of compensation for their financial cooperation. Depending on the type of business, the benefits the return could be in the form of cash or possibly a service the company is known for. Either way both the company and the investor win.
Finding capital for your business is not has hard as most people think. The Small Business Administration offers business loans as well as classes to teach new owners the ins and outs of running their own company. With a little research, you can find an abundance of operating capital