You are inspired to start a company. Perhaps you have a concept, or you are just intrigued by the idea of starting something new. You are prepared to take some chances, like leaving your current place of employment or working without income for a while. Nevertheless, there is one complication stopping you: You do not have the capital, or so you think... Let's first take a peek at why a business requires capital. There is no universal business startup expense for starting a business, and different companies have different requirements depending on your business model. It is essential first to assess how much funding you will require before attempting to secure financing.
Permits and Licensing.
Depending on your area and industry, you may need to file the appropriate documentation to begin your new venture.
Equipment, Inventory and Office Supplies.
Do you need computers, specific tools, special programs or other materials?
Business location is a tremendous cost, and you cannot ignore stuff like Internet, utilities, cleaning services, payroll, and accounts receivable. Although some of these items can be outsourced, it may be a good idea to keep them in-house at the beginning.
You need to get as detailed as possible when laying out your operating costs; Associations, subscriptions, memberships, marketing, employees, freelancers, contractors and of course legal fees. If you can't-do it alone, you will require staff on your payroll. There are two proven methods to beginning your venture a launching your "baby," decreasing your expenses or raising capital from external sources. You have three choices here:
Limiting your expenses.
Adjusting your business model to require fewer resources is an excellent way to cut costs. For instance, being the only employee of your new business to start or working from a home office is a great way to cut big expenses out at the outset. However, some costs cannot be avoided like permits, licensing and legal fees even with the saving mentioned above. A recent article from the SBA, states that many small businesses start with $1,000 to $3,000 in startup funds.
Grassroots and Bootstrap
Slow and steady may be the right approach. Rather than launching into a full-blown business mode, you start with just a few products, services or clients. By reducing your initial reach, you can to get a head-start and still maintain your current quality of life. Starting out as the only employee will alleviate some of the highest start-up costs. Once you start clearing some revenue, you can start to reinvest some of those profits back into the business and bring on the additional expenses needed to build the company you conceived.
There are many ways to raise start-up capital for your business -- even if you do not have any money yourself. Below are a few ideas on how to secure the funds you need to grow: Don't rule out the feasibility of accepting aid from friends and family, even if you have to piece the resources together from various sources.
Private investors are affluent people who support businesses during and after their incubation periods. These type of investors usually require some form of ownership in exchange for their investment.
Venture capitalists are typically companies or organizations and favor businesses that are now in existence.
Crowdfunding is big for a reason: with a good idea and enough work, you can attract funding for anything.
Grants and loans.
The SBA, as well as some government agencies, exist entirely to benefit small business growth. Several of these agencies offer loans and grants to support business start-ups.
Bank loans are a good choice if your credit is in good standing. Although securing a bank loan can take up to three months to finalize a personal line of credit may be an option for your start-up.
Merchant Cash Advance can be a quick and complete financing solution in many cases, especially for those who are considering investing in an already active operation. Once you have been in operation for at least three months, merchant cash advances may be the quickest way to secure the funded needed. With one or more of these funding options, you should be able to decrease your monetary expenditure to virtually nothing. You might have to make some additional sacrifices, including, partners or procuring debt. Capital is one of the biggest obstacles when starting a new company, but if you trust in your business plan, - it can be mastered.
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