Inventory? Check, Employees? Check, A base of customers? Check. You have all of these things ready to go and your small business dream is about to take off, but you are forgetting one thing… capital. A business needs money to run effectively, and the vast majority of us do not have huge amounts of cash just laying around. Therefore, it is appropriate to consider options for funding a small business before you get too far down the road.
A Bank Loan
This option is likely the one that pops into the minds of most people when they think about how they might fund their operation. Sure, you can walk into the bank and hope that they will offer you a loan. In order to get one you will need to have a very detailed business plan as well as some financial numbers (real or projected). The bank will then take this all into consideration and potentially make you a business loan if they feel it is their best interest.
Reach Into Your 401(k)
If you are fortunate enough to have a 401(k) that you have been contributing to, this can be one way of funding a small business. Those funds will not last forever, so you should tap into them and try to start generating some profits as quickly as possible. The length of time that this can keep your business running will depend on how much is in your 401(k) as well as how fast the business burns through money.
Ask For An Angel….Investor!
You might feel like you need to start praying in order to get to funding a small business, but you actually just might need what is known as an angel investor. This is someone who sees the potential in your idea and wants to provide funding to it. They do so of course in exchange for a certain percentage of ownership in the company.
This type of funding can be very beneficial. It can also be pretty hard to come by at times. There are thousands upon thousands of small business ideas out there and only a few of them are any good. Angel investors have to carefully allocate their resources in order to make a profit. If they get the sense that your idea is not going anywhere they will not invest.
Use Your Credit Cards
If nothing else seems to be working, you can always reach into your pockets and pull out the credit cards. You may well rack up a lot of debt doing things this way. There is no guarantee of success, so you ought to think about this long and hard before pulling the trigger on this plan.
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