Finding start-up money for a new small business: Part 1
Many people dream of starting a small business. Few people actually do it. The largest obstacle for many people is raising enough money to get off the ground. But somebody out there is making it happen; new businesses are popping up every day. Here is a look at some of the most common sources of start-up money for a new small business. Hopefully these ideas can help you get the ball rolling in starting your own small business:
Many new entrepreneurs are told not to give up their day job. This is sound advice. A steady stream of income may be just what you need in the early days of starting a new business. It will help you to avoid borrowing the money from someone else and can keep you solvent in the early days. Try cutting back on hours or working part time to free up enough time to work on your business.
This is oftentimes the simplest way to invest in your new small business. Again, it helps you to avoid borrowing money early on. It also lets you keep your business affairs private, in your control and free of possible legal entanglements if something goes wrong. Additionally, you will own business assets free of debt making it easier to borrow later on or to entice future investors in your business. There are few investments that can pay off as handsomely as an investment in your own small business.
Extra word on personal savings
If you do not have a savings built up, consider spending a year or two accumulating one before you start your business. You may need the freedom and support of this type of capital. It will also be a source of reserves in case of unforeseen circumstances that will surely arise.
Many entrepreneurs have started their own business using plastic. It is a wonderful way to buy business equipment like fax machines, printers, and furniture in the early going. You can usually get a cash advance with credit cards making them extremely flexible. However, interest rates on longer-term credit card debt can get very high, sometimes as high as 20%. Do not borrow at those rates for a long time or instead of floating your business, credit cards may wind up sinking it.
Oftentimes the most difficult part of starting a small business can be finding the money to get off the ground. There are countless sources of money, but three of the most common sources are salary, personal savings and credit cards. So some good advice may be “don’t quit your day job,” save before you start and have a nice line of credit for support. Thousands of entrepreneur have started with a nice mix of the above three sources of income. For more advice on how to raise income for small businesses stay in tune to the website and check out part 2 of this series.
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 Fred S. Steingold, Legal Guide for Starting and Running a Small Business 153-156 (Betsy Simmons ed., Nolo 10th ed. 2008).