Foundations

The best business tip I ever got was from my father as he set up his first business. He hammered home the point; when you are starting a business you should watch every single dollar spent. Too many people spend every bit of money they acquire before the business even opens. If you open your doors penniless you have no room for failure, everything must work. The reality is that you will likely need a financial cushion. As I began my first business I really began to saw what he meant.

Sometimes, once you open your doors, you realize that your marketing campaign was all wrong. If you’re broke how are you going to dish out the cash to remedy this mistake? Sometimes you’ll find that your inventory is not quite right… that’s not a cheap fix. Now when I’m starting a business I question every purchase, do I need this $12 stapler right now? Not really I have three at home that I never use as it is. Is a commercial size copy machine really practical for my business? I think the twenty or so copies I make a year can all be done from my desktop 3 in 1. Remember, even the small purchases add up over time.  

Of course sometimes stingy can be bad. If your tight pockets have led to renting inadequate space (with a five year lease) this will ultimately reflect poorly on you and that much needed loyal client base will turn on you. Basic rule of thumb; if making a purchase is the only way to get customers then get it, if you can pass… do. Once you start making a little money you can start investing a little more. 

You always want to portray a professional appearance but you may be surprised how professional you can seem on a shoestring budget.  

Whether you are just starting out, growing a business or simply trying to keep your head above water, you are likely in need of money to keep your business going. Of course there are a hundred different ways to get the money needed but most of the legal options are more than a little tricky to attain. If, however, you do seek finances from a variety of locations you are more likely to get the much needed financing.

Grants 

One of the best forms of financing are government grants. Grants are great because they do not require repayment. While they do take a lot of work and energy to acquire, the payoff can be huge. The downside to government grants is that many grants place stipulations on how the money is to be spent. It is also important to realize that no government grants are offered to new businesses; most require that the business has been up and running for at least two years. Grants can be found for women, veterans, Native Americans, farmers, those helping the environment, just about anyone really. The one thing to keep in mind about grants, however, is that no one should be charging you to access a full list of available grants. Anyone trying to charge is likely a scam artist. You can find a full list of government grants through www.SBA.gov.

Loans 

If you have tried to get a grant and do not qualify you will likely move to a loan. Most banks and credit unions now offer business loans. If you have been running a successful and profitable business for a few years then getting a traditional bank loan should be no harder than writing up a new business plan, filling out the paperwork and presenting your information to a board. The whole process will take a month or two, lucky you. If you are not so lucky you will have to get your loan guaranteed through the SBA. You will also have to, more than likely, make a personal guaranty and come up with collateral. If this is your situation you can expect the process to take upwards of 6 weeks. Sometimes this can work out in your favor. The Patriot Express loan, for example, is offered at rates starting as low as 2.5% APR (as compared to the average 7%) for vetrens and their spouses. Similar loans are available to women and minorities. Whatever hoops you need to jump through your bank will surely help you get started.

Alternative Financing

Other financing options include asking friends and family, angel investors, winning the lottery, selling stocks and bonds, and private grants. If you choose to borrow money from an acquaintance treat it like a bank loan. Make sure to draw up a formal contract detailing repayment. Money issues can ruin friendships and tear families apart. The more formal the money transactions the more likely there will be no hurt feelings. Angel investors and private grants can be a challenge to find. If you have a winning personality you may just luck out and win over the private investors that are offering to fund a business. Be aware, however, that often strings are attached. Read every contract VERY carefully; you may just sign over half your profits without realizing it. Selling stocks and bonds can be very tricky as well. Before you even think of going this route be sure that you have a great accountant and an even better attorney on your side. As for the lottery… well you gotta play to win, good luck!