Getting a new business off the ground often requires marketing, initial purchases of products or equipment, a physical storefront or other investments. How can you acquire funding to invest in a strong foundation for your business?
Using personal funds can seem straightforward, but also comes with risk
As the Small Business Association notes, using personal funds—including pulling from your retirement accounts or asking friends and family for money—can keep control of a business in your hands. However, it also puts you at risk of paying additional fees and could jeopardize your personal finances or your relationships if your business does not take off in the way you expected.
Connecting with investors will involve additional effort
Investors who are passionate about your new business can be a great way to acquire funding. However, connecting with those investors can require significant networking efforts and a well-organized business plan. Investors may also expect to own a portion of your business in exchange for their financial support, leaving you with less control over the company’s future.
Crowdfunding may provide you with funding through word of mouth
If your new business can catch the eye of the public, you may be able to receive investment from the public for a small perk or other thanks. While this is a relatively low-risk option for business funding, it may require greater marketing or networking efforts to reach a wide audience of crowd funders.
Loans can provide you with money, but you may need to organize materials first
Small business loans can provide you with money now that you can repay over time. However, you may also need to outline your business plan and your future financial projections to illustrate your ability to repay the loan. You may also want to supplement these plans with additional information like an operating agreement. Most lenders will require your Business Plan, your Operating Agreement, your Financial Statement, and sometimes Key Employee Contracts, and Personnel Policies. You may be well served to work with an experienced attorney who handles business start-ups and small business representation.
No matter which option or options you choose, choosing the right funding approach for your new business can help you invest in your company’s future.