Many people dream about starting up a small business of their own for months or even years before they really act on that dream and make an effort to bring their dream to reality. If you have decided to take your great business idea to the next level, you may be making plans and taking steps to get the ball rolling. One preliminary step that you will need to make before you can really get your business off the ground is finding start-up capital. It is common for entrepreneurs to first consider using personal financial means to fund a start up. This may mean drawing from personal credit cards, taking out a home equity loan or eating up personal savings. In many cases, however, this is not entirely necessary. For some start ups, personal financial contributions may not be enough.
It is common for people to go into debt starting up their business, but it is not ideal to start a business in the red. Initial income from the business will then be used to pay the debt back rather than to fund future growth of the company. This can decrease the viability of your company and decrease the opportunity for it to grow rapidly in its early years. It can also prevent you from enjoying profits from your company. Raising small business start-up capital without borrowing from other sources is critical to getting your business started on the right foot. So what are your options for finding the capital your business needs without borrowing money?
The government offers numerous grants designed to help small businesses get the capital they need to start their businesses. Grants for technology-based businesses, grants for businesses owned by women, or grants for minorities (and more) are common and under-utilized. However, many entrepreneurs may find grants they qualify for with proper effort. You simply have to start exploring the options and apply for grants that are best suited for you.
Venture capitalists typically work with companies that have at least a short track record of success as well as a lot of upside in terms of potential profits. So this may not be a feasible option for most brand new start ups. It is well-suited, however, for entrepreneurs who have already taken the initial step to get their business off the ground and who are in need of additional capital. When entrepreneurs are successful with requests for venture capital, the funds provided are typically significant.
If you have some amazing friends or even some well-off family members, you can ask them for a small (or large) financial gift. It is possible to ask for a loan that you intend to pay off, but a gift is preferred. You can offer to provide them with free or discounted services or products if your business takes off. Consider hosting a fund raising event, such as a backyard barbecue or more formal affair, at your own house. Ask friends to learn more about your company and to contribute whatever they can to help you out. While many contributions may be small, small gifts can really add up.
Through these efforts, you can minimize the amount of money you need to borrow for your start up business venture. You may consider putting each of these ideas to use. These, combined with the use of your own funds, may be enough to get your business off the ground. Even if you do still need to borrow start-up capital, the amount you need to borrow will be diminished. Consider visiting http://www.sba.com/business-resources to learn more about the resources available to you.
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- Raise Small Business Start-Up Capital without Borrowing - November 4, 2012