Ferreting out Funding for your New Business 
Most entrepreneurs don’t come up with a brilliant business idea with an excess of cash at the outset. In fact, finding funding for your idea can turn into a scavenger hunt that leads to lots of frustration if it’s not handled properly. The most important thing to remember is not to give up—even when your determination and tenacity are put to the test. Read on to learn more about what resources to use to turn your next great idea into a successful reality.
Digging into your own pockets
Credit: In the best instances, if you have planned starting your own dream business, you’ve devised a plan to put some money away for the cause. Depending on how long you’ve been working and your current situation, you may have had the opportunity to start a personal start-up fund that you can tap into. If you haven’t been able to set aside the money in advance, you may choose to cash out your checking, savings, and under the mattress accounts. Just plan carefully.
Debit: It’s fine to take risks, but more than one entrepreneur has been forced to shut down without a dime to even let anyone know. You’re the only person who knows your own level of risk-taking. If it includes mortgaging your house, selling your car or doing whatever else it takes to get your idea off the ground, you ultimately have to make that call.
Friends, Family and Neighbors
Credit: If you believe strongly in your business plan, turning to the people who know and care about your success is an obvious route to take. Usually, these people will be willing to give you loans interest-free, or at a reduced interest-rate.
Debit: Proceed with some caution. If your business isn’t as successful as you originally anticipated, relationships could be jeopardized. Again, you need to use your best judgment when evaluating personal relationships and how involved you want people you care about in your business.
Banks and Credit Unions
Credit: The most common means of obtaining financing, traditional loans are good ways to find funding without involving personal resources or relationships. Be prepared to prove to the bankers that you are a good risk and that the probability of repayment is high. How do you prove you’re a risk they should take? You must have a solid business proposal to go along with your enthusiasm, long-term plans and show-stopping idea. For tips on how to prepare your business to be a “loan go ahead,” visit your local Chamber of Commerce office and check out the Small Business Administration’s Web site, www.sba.gov.
Debit: Don’t be under the false impression that every new idea will be given its chance to flourish. While there are many people and organizations who are dedicated to helping your business succeed, you have to realize that banks are businesses as well, and they won’t fund an organization that doesn’t give them an almost guaranteed return on investment.
Venture Capitalists
Credit: Even with a sluggish economy and conservative budgets, there are still a number of venture capitalists out there for the right idea. Since large venture
Hint: If you need help developing your business plan, freshen up your skills by reading our Crafting a Business Plan article.
capitalist firms fund a variety of companies, they are likely to have a clearly defined process in place and a lot of cash to dole out. According to a 2002 survey conducted by PricewaterhouseCoopers, total venture capitalist investing was $21.2 billion. While that is the lowest level it’s been at in five years, that figure remains nothing to sneeze at.
Debit: When you deal with a venture capitalist firm, you are accepting funding in exchange for equity or partial ownership in your company. In other words, you not only have to initially sell your idea, you also have to continue to sell major business decisions. While you are still the boss of your own business, you now have outside influences monitoring their potential return on investment, so your decisions may be scrutinized if they are unconventional. You may, however, be able to negotiate the venture capitalist’s level of involvement before accepting initial funding.
Charge It
Credit: You may cringe at the idea of pulling out the plastic to pay for major business transactions such as your attorney’s fees or network system. In reality though, credit cards are a very flexible way to finance and supplement your business costs…if used appropriately. If you treat your credit card debt as a loan with payback terms and disregard the minimum monthly payment, they can work well as a business-financing tool. It’s also imperative to shop around for the best interest rate. Many cards offer you the opportunity to transfer balances to lower interest rates without penalty. One of the best things about using credit cards is that they are much easier to obtain than traditional bank loans while still helping your company to establish a credit history.
Debit: Don’t be lulled into a false sense of security. No matter what your credit limit, you are still responsible for paying back this loan…with plenty of interest.
If the only thing that’s preventing you from launching the next best thing since sliced bread is cash flow, take heart. Money is out there as long as you’re prepared to do the detective work to find it. Just be sure to carefully weigh all of the decisions for what will ultimately make the most sense for building your successful business.
Search and Find Business Funding Sources and Solutions at http://www.businessfinance.com/capitalsearch.aspx