A Small Business Startup can still equal a big risk for a business owner. While there is often less money involved in starting a small business, in many cases it’s the owner of the business who puts up the money to get things going. In many cases, they will use use their life savings, put a second mortgage on their house, sell their car and more to get enough money to get the business started. If the business goes under, a person who chooses these funding methods may find themselves bankrupt or deeply in debt with no income coming in.
There are better ways for a startup business to get the funding that it needs, but it is up to you to find the money to get things going. Here are a few options for you to consider before you start selling off your assets to get your small business started.
Get a Partner
One popular way for a Small Business Startup to get the necessary funding is to find a partner with the cash needed to get things going. If you want a silent partner, you can expect to pay out higher dividends to your partner for their silence. If you work with someone who is going to get their hands dirty with you, then you can expect their portion of profits to be less than that of a silent partner.
Keep in mind, however, that if your partner is putting in all of the money, then they are assuming more risk. As such, you may have to allow them to own a larger part of the business, or give them a larger portion of the profits, such as 60/40.
You may be thinking that finding a partner isn’t going to be easy, and you may be right. There are some resources you can use to find someone who might be interested in your business. One option is for you to advertise online. There are a number of free and low cost sites dedicated to helping people find business partners. The other option is to use a business broker. These companies can help you find a business partner fairly quickly.
Get a Loan
If you have terrible credit and you’re trying to get a loan that you are promising to back, then you could be out of luck. If, however, you start your business and keep it small while you build a business credit standing, you can use your success to get a loan that is directly tied into your business rather than your personal finances. Additionally, if you have good credit or a cosigner, you may be able to get a small business loan in advance.
Get a Grant
Getting a grant can be a long process. In many cases, the grant provider wants you to jump through a hundred hoops to get the money that you want. However, if you’re willing to commit some time and effort to grant applications, then you could potentially get money that you never have to pay back.
If you’re a minority, then there will be more grants available to you than to other groups. Additionally, if you’re going to sell a product or a service that creates a better environment, improves technology or is associated with education, finding a grant will be easier for you as well.
No one said that being an Entrepreneur was going to be easy. But if you have a great idea, consider these things to get the funding you need to start your business.