Starting a small business does not have to remain a dream, it can become a reality. However, the struggles upcoming entrepreneurs face mostly are largely concerning finance. Multiple questions will arise. For example, is there currently enough capital to start the business and keep it going? How should we raise capital? Where to look? Where to begin? Who to ask? The list of questions for an upcoming entrepreneur is one that never ends. Fortunately with research and grants, business owners are now able to invest in their dreams.
When looking for companies to invest in your brilliant idea, you should consider the proper tactic to make an investor be interested in your idea and provide financial support. Having a solid business plan which outlines your inventory, objective, marketing plan, revenue forecast, mission statement, financial summary, income statement, and balance sheet, to name a few, will help an investor see your next big idea and want to invest. Having a good business plan not only lets potential investors know what your plans are, but will also inform them of your capabilities. This business plan creates a clear picture and pathway for a lender or an investor to envision the company's goals and future. As stated by the U.S. Small Business Administration (SBA), "While poor management is cited most frequently as the reason businesses fail, inadequate or ill-timed financing is a close second." Your business plan will outline each personnel profile; it will provide your best case scenario that will enable the company succeed, and the worst case scenario offers a clear picture of potential hindrances to the company and its future.
When securing funding for your business startup capital, there are many aspects to consider such as debt financing, equity financing, bank loans, and leasing. These options, as well as the financial help of friends and family, all offer routes to securing funds for your business startup. However, each financial decision offers varying pros and cons. For instance, debt financing is akin to a personal loan, in that you repay the amount back to a lender with interest after a period of time. Entrepreneurs who lack startup capital or funds for their business often turn to this method first. Pros: in an ideal world, you will be able to get your company off the ground and running; however, an ability to pay back this loan would saddle you and your business with a poor credit rating. Credit cards offer another option: if managed well, they can be incredibly beneficial to establishing a solid line of credit, but failure to repay debts will again hurt the business. If the credit card is used poorly, then the damage can hurt you personally as well as your business.
What are some ways you have secured funding for your business startup capital?