Small business start-ups take numerous hours of planning to figure out every detail and get the company off the ground. This planning process will include many different stages, and one of them will undoubtedly be the funding stage.
Unless you are already wealthy, this is going to be one of the longest strategy sessions of the whole planning process. Securing the funding for all of the necessities of a start-up is key to seeing it succeed.
Here are four tips to funding a small business start-up to help move this portion of the planning process along:
Utilize Small Business and Other Loans
One of the most often utilized ways to fund a start-up business is through small business loans. There are many options with small business loans to suit the varying needs borrowers may have including low credit scores, risky business propositions, and those bankers call sound investments. Some of the options available are bank funded business or personal loans, collateral loans, and private family loans.
Bank loans will have the strictest qualifying requirements of these loans but generally will offer longer terms and may offer the most funding. Collateral loans can be in the form of home equity or car title loans, which will usually afford the value of the collateral used. When choosing private family loans funds will be limited to what is available and may cause a relationship strain if not repaid promptly.
Secure Funds Through Investors or Strategic Partners
Investors or strategic partners can provide funds for a start-up business for those who do not wish to seek a small business loan. Choosing investors can be a smart move if the business idea is something that will attract support from others and could turn into a lucrative partnership if all goes well, and the business takes off and grows.
Unlike loans though, having investors or partners means that the business profits will be spread out a bit to all of the investing parties, not just the person taking out the loan or starting the company.
Explore Grants Available for Business Type
If loans are out of the question and sharing profits with investors is not ideal, finding grants for the specific business type or generic small business grants may be a way to get the funding needed.
There are many small business grants available; however, the process for applying for them and the lengths one must go to for approval often discourage many applicants. The benefits with grants, though is that this is money that you can use it for the start-up of a company and it does not need to be paid back as would be the case with loans and investors.
Use Personal Savings
One final option for funding a small business start-up is to use personal savings. While this may be one of the hardest routes to take in the beginning, it also provides the most benefit in the end.
Choosing to finance a new business with personal savings means a lot of hard work and may signify that there is only one employee starting out (you), but it also means that all of the gains go to the person with the ideas and fortitude to get the company going (also you).
Pulling it All Together
In the end, choosing the funding method that works for the specific need of your start-up will be a case-specific decision. Including funding in your planning session is a necessity, hopefully with these ideas figuring it out can be a bit easier.
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