Getting Funding to Start Your Own Business
Short on funds to launch that great idea? Join the club.
According to the Small Business Administration (SBA), 60% of all new businesses
begin as undercapitalized start-ups. The clue here is that information can pave
the way to financing. So put in the effort by doing your homework.
The SBA site (SBA.gov/financing)
is a good source of information on small business loans. And be sure to contact
your local SBA office for information on government-sponsored programs in your
Another viable source of funding is to find investors.
Don't think big venture capitalists here. Twenty or so years ago, a local woman
named Lin told me she and her partner were trying to start their own bar and
restaurant. At the same time that I encouraged her to go for it, I have to
admit, I never really thought it would happen. She didn't own a home and had an
average paying job teaching at community college. At the time it just didn't
seem feasible to me that they'd be able to come up with the kind of money they'd
need to do it. Boy was I wrong.
They raised the money by tapping friends, family and
acquaintances to be small investors. It was a big success, but as anyone who's
worked in the restaurant business knows, it was also a lot of work. After about
eight years they decided to sell and Lin changed course once again. She got her
real estate license and is living her dream on the island of Vieques off of
Puerto Rico where she opened her own vacation rental real estate company.
I remember reading an article a long time ago in
Entrepreneur or a similar type magazine on a creative way of coming up with
money to start a small business. Keep in mind my memory on this is a little hazy
but as I recall, the general idea was this:
Say you need $10,000 to start your business. Instead of
trying to borrow and be liable for the full $10,000, get 10 people to each kick
Half of the money is considered a loan to be paid back
under terms negotiated ahead of time (and in writing). The other $500 is
considered an investment. That way you and your investors share the risk.
If the business succeeds, then everyone gets the loan
portion back with interest but also earn some kind of return on their
investment. If the business fails, the most you are out is $5,000. To make the
deal more enticing, tell the original investors that if the business really
takes off they'll be given the chance to re-invest.
Of course, you will want to talk to an attorney before
drafting any agreements.
Finding the money to start your
business may not be easy but it almost always
Learn how you can Fast Track Your Dream of working at
what you love on your own terms.
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About the Author
"Profiting From Your Passions®" expert Valerie Young abandoned her corporate cubicle to become the Dreamer in Residence at ChangingCourse.com offering resources to help you discover your life mission and live it. Her career change tips have been cited in Kiplinger's, The Wall Street Journal, USA Today Weekend, Woman's Day, and elsewhere and on-line at MSN, CareerBuilder, and iVillage.com. An expert on the Impostor Syndrome, Valerie has spoken on the topic of How to Feel as Bright and Capable as Everyone Seems to Think You Are to such diverse organizations as Daimler Chrysler, Bristol-Meyers Squibb, Harvard, and American Women in Radio and Television.
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