You’ve got the idea and you know all about the business solutions that are available to help get your business off the ground. Trouble is, you don’t know where to get the money. To help get your dreams of starting a new small business on track, here are some of the most common ways to get funding:
Before looking anywhere else, you’ll want to figure out what your options are personally. You can go to a site like guidantfinancial.com to learn how to get money through loans against your 401K or IRA funds. In addition, you can just take the traditional approach and go to a bank and get debt financing, which is just paying a set interest rate at a scheduled set of repayments. The advantage of these options is that they don’t require you to give up any control in your business and keep your reliance on others to a minimum.
Friends and Family
Friends and family are an ideal source to get money from if you don’t need too much. You’ll be working with people you trust and you’re bound to get a better deal from them than you would from the nearest bank. However, the most important thing to remember when getting funding from people you know is that you should always write up a contract. It might seem silly, but you really don’t want to end up in a situation where there’s a disagreement later on that breaks up your relationship.
An angel investor is just someone who will give you money for your business in exchange for either equity or convertible debt. If you trade for equity, you lose some control over your business, but you’ll also have a partner that might be able to help move things along. In order to find angel investors, you can go to directories at places like inc.com or keiretsuforum.com.
Business accelerators are just companies that will usually give you around “$25,000 for a 6 percent ownership stake” in your business. However, even though you’re giving away equity, you get a lot in return. A business accelerator will teach you how to start up your business and will be a true partner. Basically, they’re going to ensure to the best of their ability that their initial investment in you pays off.
These common methods of funding have hopefully struck a chord with you. If you’re able to secure the funding you need, you should be well on your way to successfully starting up your business.
James Kim is a writer for Choosewhat.com. ChooseWhat is a company that provides product reviews and test data for business services and products. Their goal is to help small companies make informed buying decisions on business solutions that help their business.