10 Places To Find
Startup Funds
You have an
idea, you've done the research, you've finished the business plan,
and you have an estimate of how much it's going to cost to get it all
off the ground.
The next step?
Finding money.
Don't let this
be an obstacle to your dreams. Here are some places to look:
1. Savings
and investments. Depending on how much you're looking at, you may
be able to pull the amount from savings, CDs, stocks, or bonds.
2. Friends
and family. This is a time-honored tradition in some cultures and
could be the best way to go, depending on your situation. However,
exercise caution: your finances might become grist for the family
rumor mill and you might create friction if something goes awry.
3. Credit cards.
Again, depending on how much you need, you could use the cash
advance line on a credit card as an unsecured line of credit (albeit
an expensive one). Look for low interest rates and cash advance fees.
A recent Arthur Anderson survey of small and mid-sized businesses
revealed that nearly 50% of all small businesses use credit cards in
some capacity to get up and running.
4. Bank Loans.
Frankly, bank loans are tough for startups to acquire. Usually banks
loan money to companies that are stable and profitable or whose
officers have a successful business background. They're not
impossible, however. Make sure you have your business plan in order
before approaching your banker.
5. Personal
or Home Equity Loan. Since bank loans can be difficult for first
time businesses, you might try getting a personal loan using your
personal property as collateral. That's where 20% of businesses find
their start up funds, according to that same Arthur Anderson survey.
6. Selling
personal assets. If you have antiques, jewelry, collectibles,
stocks, or real estate on your balance sheet, you might consider
selling them to get your startup funds. A recent news story I saw
reported that the antique jewelry market has seen a surge lately as
more and more people sell unworn heirloom jewels to finance business startups.
7. SBA
Guaranteed Loans. If you live in the United States, you might be
able to get the Small Business Administration to back a bank loan.
That means that while they don't loan money themselves, the Small
Business Administration will, upon reviewing your business plan, help
you find and secure funds from the private sector. To learn more,
visit the SBA site, http://www.sba.gov/financing/indexloans.html.
I don't know
what's available outside the US, but you might try your local
Business Information Centers, Chambers of Commerce, Employment
Development Department, or similar entity.
8. U.S.
Government Grants. Get startup money from Uncle Sam?
Absolutely...if you're a U.S. citizen. There are thousands of grants
available for specific types of research, and it's how both Donald
Trump and Ross Perot got their start. You'll need to dig a little,
but you can find a comprehensive list of grants at:
Also try:
9. Angel
(Personal) Investors. An Angel Investor is a person or entity
willing to invest in your startup for a percentage of the equity. You
MUST have your research and business plan done before you approach
them. Typical investments stay in the five figure range.
An Angel's
biggest concern? Getting his money back. Angels also tend to invest
in things they understand or participate in, so approach people who
are going to be the users, suppliers, or people within the industry
or market area. Don't go after your technophobic lawyer to give you
money for your mp3 idea, for example.
10. Venture Capital.
Venture Capitalists look for highly profitable, very fast growing,
early to mid-stage ventures. They seek almost immediate returns on
their money, which often include funds from wealthy individuals and
institutional investors (i.e., pension funds) looking for a high rate
of return.
Often, they'll
want a lot of control, and will bring in their own people to "run
the show." Venture capitalists really like "hot"
industries (high-tech, Internet, etc.) and companies that are poised
to go public.
Want some other
places to look? Check out these sites:
Ready? Set? Go
find some startup money! |
