 |
10 Step-by-step Business Startup Guide: Step 6
Author: Dave J  | Posted: 12-04-2007 | Comments: 0 | Views: 3 | Rating: (50)  (?) 
 STEP 6: Funding
This could be a very important step for businesses that require capital to startup and funding to keep overheads and inventories on track. Finding funding is not difficult. But getting the right funding is crucial. Of course there is a saying that goes, “beggars can’t be choosers”! Nonetheless, startup owners must be smart when seeking funding or it could turn their dream business into a nightmare.
I would normally identify my short term and long term business goals and the kind of business I am planning to launch. Once I finalize my directions, I would then identify which form of financing is right for me.
As money comes in many forms, let me tackle the available options to fund any kind of business:
* Oneself
* Debt Financing
* Grants
* Friends and Family
* Venture Capitalists
Oneself
First of all, I believe startup owners should look no further to find the funding they need i.e. savings, emergency accounts, credit cards, equity pulled from their home, extra cash from downgrading their car, etc. The upsides are owners get to maintain full control over their businesses, no equity holders to pay off if they made it big and there is no responsibility to report to anyone.
Nonetheless, if the business fails, they will face a lot of personal debts, high interest to pay off that could burden their monthly expenses and it limits the growth of their business (especially when they need more outlets or inventories for strategic growth).
Debt Financing
It refers to traditional bank loans. The lending process is inherently a tough one, but it’s also a system that has been the catalyst of success for many small-and-medium-scale business startups. The advantage of debt financing is owners don’t have to give up part of their business equity or control. Besides, they have instant access of capital when they need most throughout their business operation.
The core disadvantage - not many “new kids on the block” will qualify for bank loans because it typically goes for business with 2-5 years of history. Moreover, personal collateral is usually required to obtain any bank loan and if they failed to pay the loan they may end up filing for bankruptcy.
Government Grants
Grant is a very subjective form of funding because its source usually comes from government. Different governments at different times would launch different funding programs, but they all share one commonality; it is free money program designed to fuel the innovative fires of small businesses, and typically target specific groups or types of businesses. Of course the greatest advantage of getting a grant is owners need not payback even if the business failed.
Then again, the competition is stiff for grants as there is a high level of rigid red tape to be complied with and the usage of the grant (after being approved) are usually well defined.
Friends and Family
Just like it describes, a simple and direct way to raise capital in exchange for equity or as a loan to be repaid. The good side of borrowing from friends and family is, it’s less hassle, quicker and has less contractual obligations. The bad sides are the fund size is limited and the consequence of losing their money could lead to a sour relationship.
Venture Capitalists
They are made of individuals or organizations with large amounts of capital to invest in your business in expectation for higher returns. Getting investment from venture capitalists is equally as demanding as borrowing from the bank. They are demanding because they only invest in established companies. They usually get involved in the company’s decision making, and they must have an aggressive exit strategy to sell the business. Usually, they prefer a fast growing company i.e. Internet-based company.
Nevertheless, the upsides of venture capitalists’ funding are they can provide owners with powerful networks or contacts and owners need not payback if the business failed because they have big reservoir of money for owners to tap into.
*Note: Unproven teories to not be shown to my readers! If you need any small business startup help, feel free to visit my Website :)
=> To get the complete online business course on
small business startup guide, log on to
http://www.12daysonly.com , and redeem your
BONUS PACKAGE worth US$1,396.00
--
Disclaimer - This article may be freely reprinted in its entirety in any e-zine, newsletter, blog or website. The author’s name, bio and website links must remain intact and be included with every reproduction.
Rate this Article:
Current: 0 / 5 stars - 0 vote(s).
Article Source: http://www.articlesbase.com/business-articles/10-stepbystep-business-startup-guide-step-6-130310.html
About the Author:Dave J, is an E-preneur, NLP-Certified Business Coach and Author. Within a decade, Dave J has served as an advisor to countless small-level to high-level business leaders around the world. Despite such a short span, Dave J has becoming a highly-respected authority on the psychology of business leadership, business startup, management and marketing. His forte is coaching ordinary people to attain professional and financial breakthrough.
|
Submitting articles has become one of the most popular means of generating quality backlinks and targeted traffic to your website. Join us today - It's Free! |
|
Related Articles
Dave J - Instant Business Startup Guide & Help
By: Dave J | 12/04/2007 | Business
10 Step-Business Startup Guide: How I Actually Get Started From Scratch!
When I planned to start my own business many years back, I talked to dozens of successful entrepreneurs, I attended seminars, I purchased training materials, signed up for courses and participated in countless business events. But I still do not get satisfactory answers for a systematic approach to starting up and running a profitable business. One thing for sure, it has cost me a lot of money and time in the process...
10 Step-by-step Business Startup Guide: Step 1
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 1
I never take this preliminary step lightly. I always start off with thorough planning. As we always say, plan your life, and then plan your business. Once you know where to go, you can then have a pleasant journey...
10 Step-by-step Business Startup Guide: Step 2
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 2
Once I have selected the kind of business I want to do, I would brainstorm how to run the business. In today’s technology, there are many business models to choose from i.e. part time or full time, at home or totally mobile, online or brick and mortar business...
10 Step-by-step Business Startup Guide: Step 3
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step
In my experience and observation of the business world, the “activity” of creating a business plan is as valuable as the end product itself. Just remember that the most important audience for a business plan is ME. I am accountable for all the statements, claims, statistics and facts. So if I try to “twist” the figure, I am actually lying to myself!
10 Step-by-step Business Startup Guide: Step 4
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 4
This is the step where I need to select an organization structure that best fits my business model. I personally find there is no “best” structure for all businesses. However, I normally prefer to select one that provides me with high autonomy and low tax liability. Again, this will also depend on the national, federal or local tax structure for each business entity in the country or state I conduct my business...
10 Step-by-step Business Startup Guide: Step 5
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 5
I definitely would not startup a business without any key asset. But it doesn’t stop here. My key assets are only as good as my ability to protect them, especially when intellectual property is concerned...
10 Step-by-step Business Startup Guide: Step 7
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 7
I found out that many businesses went bust before they even went fully operational because they did not start right. Starting right can mean the difference between success and failure. It simply means I should have all the tools, information, facilities, contacts, money management and government compliances all fully prepared and organized...
10 Step-by-step Business Startup Guide: Step 8
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 8
In a small to medium scale business, the importance of a single team member can be enormous. Every person I place under my organization (be it associates, staffs or suppliers) must be a star. This may sound “impossible”, but it is possible. Firstly, I would define what a star is within each role in my organization. Then I would seek them out...
Got a Question? Ask.
Ask the community a question about this article:
Q&A Powered by: 
Latest Business Articles
Water Damage & Solano County Flooding
By: Mark Decherd | 26/07/2008
If you live in Solano County, it's imperative that you are aware of the flood potential and understand the risks. The wet months run from November through April. During these months, you are more likely to experience flooding.
Is it Time to "reset" Your Business?
By: Linda Feinholz | 26/07/2008
When is 'too much to do' finally enough? I mean enough to have you reach out and slap your personal and business 'reset' button? Do you ever feel like you're buried under overwhelm? Sometimes prioritizing the to do list isn't what needs to be done.
15 Ways to Improve Your Closing Ratios and Sales Presentations
By: Katrina Sawa | 26/07/2008
It is not enough to do launching effective marketing campaigns to obtain new customers and to continually market to your existing database for more referrals and repeat business. In addition, you must be able to ask for and close the sale. Otherwise, it is a waste of time and money!
In Searching for Cost Reducitons, Look at Total Cash Flow Costs Rather Than Accounting Costs
By: Donald Mitchell | 26/07/2008
If you are a privately held company, look to reduce overall cash costs when considering alternative cost reductions, rather than the impact of reported earnings.
The More Trust, the More Time to Succeed
By: Andrew Cox | 26/07/2008
Bill Oncken, in his book Managing Management Time, says that the more trust you have with your "universe " of people, the more time you have to do the things that lead to success. Trust is hard to earn. Once lost it's hard to regain. It's the most precious asset in any relationship - at any level - at any time. Read on to see how a successful Division President builds trust.
10 Tips on the Issues With Selling Professionals
By: Drew Stevens | 26/07/2008
The world of professional selling is rich with information related to selling skills, sales training and techniques to assist professionals. However, after much rhetoric and information I am finding something completely different...a problem with selling professionals.
India - the Next Economic Powerhouse
By: Paul Hata | 25/07/2008
India is one of the fastest-growing countries in Asia. In 2006, India recorded a 1.2% of world trade share overall. The stat was picked out from WTO. The growth is mainly due to the liberalization that took place in India way back in 1991. Ever since then, there's no looking back.
Customer Service Toolkit
By: Drew Stevens | 25/07/2008
All businesses make money, yet those that are customer focused are more profitable.
More from Dave J
10 Step-by-step Business Startup Guide: Step 10
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 10
Read any autobiography or business success story, you’ll notice one common denominator for success - sales. You need to take whatever action possible to ensure that sales are consistently growing to allow you to gain profit...
10 Step-by-step Business Startup Guide: Step 9
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 9
There is one very important intangible asset I need to create and harvest in my business; a powerful brand. Brand here refers to the “summary” of my business identity, how unique is it from the rest, and why buyers should choose my product/service over other alternatives...
10 Step-by-step Business Startup Guide: Step 8
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 8
In a small to medium scale business, the importance of a single team member can be enormous. Every person I place under my organization (be it associates, staffs or suppliers) must be a star. This may sound “impossible”, but it is possible. Firstly, I would define what a star is within each role in my organization. Then I would seek them out...
10 Step-by-step Business Startup Guide: Step 7
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 7
I found out that many businesses went bust before they even went fully operational because they did not start right. Starting right can mean the difference between success and failure. It simply means I should have all the tools, information, facilities, contacts, money management and government compliances all fully prepared and organized...
10 Step-by-step Business Startup Guide: Step 5
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 5
I definitely would not startup a business without any key asset. But it doesn’t stop here. My key assets are only as good as my ability to protect them, especially when intellectual property is concerned...
10 Step-by-step Business Startup Guide: Step 4
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 4
This is the step where I need to select an organization structure that best fits my business model. I personally find there is no “best” structure for all businesses. However, I normally prefer to select one that provides me with high autonomy and low tax liability. Again, this will also depend on the national, federal or local tax structure for each business entity in the country or state I conduct my business...
10 Step-by-step Business Startup Guide: Step 3
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step
In my experience and observation of the business world, the “activity” of creating a business plan is as valuable as the end product itself. Just remember that the most important audience for a business plan is ME. I am accountable for all the statements, claims, statistics and facts. So if I try to “twist” the figure, I am actually lying to myself!
10 Step-by-step Business Startup Guide: Step 2
By: Dave J | 12/04/2007 | Business
10 Step-by-Step Business Startup Guide: Step 2
Once I have selected the kind of business I want to do, I would brainstorm how to run the business. In today’s technology, there are many business models to choose from i.e. part time or full time, at home or totally mobile, online or brick and mortar business...
|
|
Business 
