Per2Per
How to Succeed in Business
Getting Business Funding: How to Start?
In most cases the early funding for your business is going to have to come out of your own pocket. It is very difficult to get money from other sources unless you have already invested some money yourself. The first reason is that having your money invested shows that you are committed to the company and that you are willing to see it through. It is a lot easier to shutdown a business and walk away if you don't have your own money invested and that will scare off a lot of investors. The other reason that you are probably going to have to put your own money into your business is that banks and investors rarely put money into an idea. They will want to see the company up and running before they put money into it and that means you will need to put your own money into your business.
The second most common source of funding for a business is a bank loan. In general in order to get a bank loan you are going to have to your company up and running and at least have started your business. When you go to apply for a loan the bank is going to want to see your business plan so make sure that this is put together properly. Unless your business has a track record on which to base the loan it will be based largely on your personal credit. The advantages of getting a loan from a bank are that you can get funding without having to give up ownership of your company. The downside is that you will have to pay the money back.
The other common way to get funding for your business is to find investors. The advantage to this approach is that you will get money without having to pay it back. On the other hand you will have to give up a stake in your company. In general your business will need to be more mature to find investors than it needs to be to get a loan. It is rare that money will be invested in a company until it actually has sales. In order to get money from an investor you are going to have to schedule a meeting and make your pitch. In large part the decision will be made on the basis of your business plan.
One option for funding that all businesses should look into is grants. These are usually offered by the government but there are other sources as well. A grant is money that doesn't have to be repaid nor does it require you to give up a stake in your company. Grants are usually offered to encourage new businesses to get started in order to increase employment opportunities. The hardest part of getting a grant is often finding the ones you are qualified for; there are all kinds of sources for them. It is a good idea to apply for any grants that your company qualifies for.