If you’re looking to start a business, there’s one thing that you cannot move on without the money necessary to kick everything off. You need money for the business location, equipment, product, labor, and service costs until it can start to turn a profit. But where should you get those funds from? There are a few options worth considering.
The bank
The most traditional answer is that you go to the bank for a loan. Banks are where you’re likely to get the most money if you need it but this is also a drawback, as they may not be suitable for those who need smaller amounts of money and can be pretty slow to come to a decision. Be sure to use sites like LivePlan to create a business plan so you can lay out the business pitch as best as possible, too.
Business loan providers
If you need a provider who is a little more flexible than a bank, able to get the funding to you a little more quickly, and to lend in smaller amounts, then you might want to go with a private lender. The criteria for application can be a little more specific, but companies like Change Wholesale can help you get your business rolling more quickly after your application. You just need to make sure that you’re ready ahead of time.
Angel investors
Getting a hold of an investor who is willing to believe in your business and to put their money behind it can be tough. However, if you can find an investor, it often comes with the benefit of not having to pay all or any of the money that they provide. However, in exchange, they may request a portion of the ownership of the business.
Friends and family
If you’re unable to get the money anywhere else, or unwilling to pay in exchange for what other lenders and investors request, then you can instead look to those around you. Needless to say, getting your friends and family invested in your business can be quite messy and it’s not the best way to separate the personal and the business. However, most of the time, these are the people who are most willing to be generous with their terms.
Bootstrapping things
There’s always the chance that you might not actually need all that much help to get your business off the ground. If you can spend the time raising the money you need yourself, then you could skip a loan. Plenty of businesses are bootstrapped at the beginning, only getting loans later when they need to grow. But you need to make sure you’re not making the early mistake of starting without the funding that your business is actually going to need. Only bootstrap if you’re certain you can cover all of the running costs of your business’s first days in operation.
There’s no real “correct” answer when it comes to where you get the money necessary to start your business. Hopefully, however, you have a better idea of the benefits and drawbacks of each of the options laid out.
