| There are many challenges when starting up your own small business. Funding is a major thing to consider when embarking upon this journey. Finding out where the funds where come from can sometimes become a very stressful venture. This is an obvious obstacle, which must be overcome, and one, which prevents many people from starting their own small business.
Bank loans
Bank loans are usually the step that most people take when wanting to start their own small business. Banks can be demanding for things such as collateral and business plans. Banks do tend to make it tough on the every day person wanting to start their own business. The demand for personal assets and the thought of placing your home up for collateral can be very tedious yet scary at the same time. Banks can even place the demand that the business owner literally rent their business space as compared to purchasing the space. They make these demands sometimes because they do not want you to tie up their money in assets that in the bank?s eyes will offer no short-term rewards. Banks can demand that you use their money for inventory, which will offer them some immediate returns in case of foreclosure. Banks also offer loans with interest charges therefore; it is obvious that bank loans come with much more than the actual loan at hand.
Government grants
Government grants is something I recommend to everyone interested in starting their own small business. The US as well as other countries has numerous programs that cater to the needs of potential small business owners. Make sure you check not only the federal government but also your local state and state government as well for possible grants, which could aid you in your venture.
Relatives or friends
These are good sources because they are obviously people who care and trust you. The only downside to this suggestion of relatives or friends is that they very well may feel that they own a stake within your business. This of course has no legal binding however; it can create serious rifts between you and your loved ones. Make sure you indicate that the money is only a loan and will by no means give them any share or say in your new small business.
Your personal savings
Dipping into your personal funds is yet another way to fund your small business. This is typically performed with a combination of other methods. The great thing about this method is that you will not be faced with interest charges that other loans will demand.
Private donations or investors
If you feel you have a great new idea for a new small business, you can possibly sell your great idea to potential investors; these are commonly called venture capitalists. Unlike receiving loans from your family members, this method will indeed entail the investor some type of stake in your business. The disadvantage of this method is that the idea has to be creative as well as unique; you have to literally convince the investors you are going to make money. A controlling interest in the company will be given if an investor spends their money for you to start your own small business. |