Beginning a new business opportunity is exciting, but you need to be responsible to be successful. Before you dive into a new business opportunity, you should consider your financial situation. How do you plan on funding your business?
Every business is different, as is every business owner. There is no right or wrong answer to how you should fund your business, but there is a technique that will work best for you. Here are some things to consider:
1. A small business loan
Did you know about 43 percent of small businesses apply for small business loans? A small business loan can help you get your business moving in the right direction. These types of loans are reliable, as well as helpful. When choosing a small business loan, be selective. Ask about interest rates before signing any paperwork to make sure you aren’t getting in over your head. Applying for loans through the U.S. Small Business Administration is another way to be sure you are getting a quality loan that you can handle.
2. An angel investor
An angel investor is someone who invests in your business to help you acquire capital. In return, an angel investor receives equity. While this is less risky than a business credit card or short term loan, equity financing means forfeiting some of the control of your business to a partial owner. If you do decide to work with an angel investor, make sure you are on the same page as them as far as equity percentages and business models.
Crowding is growing more and more popular, thanks to the digital era. There are over 600 crowdfunding platforms you can take advantage of to raise money for your business. Crowdfunding is essentially donations from the public. Sometimes small businesses give incentives to donors to encourage donations.
4. A personal investment or borrowing money from friends and family
The last option to consider is borrowing money from friends or family. Even though this is the last option we are mentioning, it is often the first choice for many people. When you go to start a business, you may ask for financial support from your loved ones. Sometimes they will let you borrow the money if you promise to pay them back, other times they will give you the money as a gift. Be sure to communicate with your loved ones when borrowing money to make sure you are in agreement with where the funds are going.
Once you’ve decided how you are going to fund your business, you are ready to get things started! For help buying a business, reach out to Hallmark Business Brokers at 941-445-4726 today!