When starting a small business you will face many challenges, and the most daunting of which is figuring out how to fund the business venture. Whether the business inspiration comes from a personal passion, or the idea rises from a service or product need it doesn’t really matter, capital is required.
Sometimes a business grows organically, and simply. We have all heard the stories like the origin of Apple, starting from a garage to become one the most powerful companies in the world. These stories are fantastic, and exciting to think about, who knows maybe your idea is the next Apple. One good idea can take you far if you are willing to role up your sleeves and work.
Ultimately, no matter how modest the business plan, and how simple the strategy capital is required. Using personal savings is a common way to start. If you are using your own money, you are in complete control. There is an old saying about the “golden rule”: whoever has the gold rules. So, the less indebted financially you are to others the more in control you are of you your business. Of course risking your own money has its own down side, and sometimes it may be better to use other peoples’ money.
So, where does other peoples’ money come from? There are a number of possible sources. Banks are an obvious source for a loan or a line of credit. Banks tend to make conservative business decisions. Following the financial collapse of 2008 banks pretty much refused to make small business loans. Recently this appears to be changing, but they do not just hand out business loans to anyone. If the business is brand new you will likely have to take out a personal loan or line of credit. If the you have a good credit rating, and some assets this is often the easiest and quickest way to gaining some working capital. Of course this means your good name is the on the line. So, be thoughtful, and conservative in what you are willing to borrow for the business. Only borrow what you need and pay it back as fast as you can.