There’s no shame in asking for a little help when you’re starting up – you’ll have a hard time finding a successful entrepreneur who financed his venture solely from savings. Getting business financing is a mixture of having a good plan, making the right pitch and simply being in the right place at the right time. Here are some suggestions on how you can get the financing you need.
Working with a bank or similar company
These days, most people in need of cash will first try their luck with a bank. It’s certainly convenient – a bank will pay the whole sum up front, usually soon after you’ve made the request, and will make the terms of the arrangement clear.
Still, getting a bank to give you a business loan isn’t easy – these loans are almost always five-figure ones and can sometimes reach six figures. You’ll need to present your case convincingly, making it clear that you know what you’re doing and will be able to use the company’s profits to pay the loan back in a timely fashion. Get ready to create an in-depth plan of how you’ll make your business succeed and ask for multiple opinions before presenting it to bank officials.
Credit cards are another way – those unable to work with a bank will try to use cards to get the quick cash they need. Sure, it can work, but should it? If a bank won’t issue you a loan, there’s a good chance your credit history leaves a lot to be desired – learning from past mistakes is part of what makes a great businessman, and you should start even before opening the doors of your company.
Alternate ways to Finance Your Business
If you don’t like the idea of working with a bank or credit card company (or are unable to), you can try finding an investor who will finance your venture. There are good and bad sides to this and you should evaluate both carefully before asking for help.
One of the big benefits of working with an ‘angel’ investor is that the loan is often under the table – there is no contractual obligation nor monthly rate on your part, only a promise to pay it back. It sounds great, but finding one such investor can be just as difficult as getting a bank loan with bad credit. For best results, try looking to the community – if you’re planning on opening a carpet cleaning business, find an affluent member of the community who cares about its betterment and point out how there’s a lack of top-notch carpet cleaners in the area.
The best sides of having an investor can also be its downsides: he or she can decide to change the terms of the agreement at any time, usually by asking for more money back than initially agreed upon. Therefore, make sure that whomever you choose is a supremely-honest person who won’t pull any shenanigans.
Lastly, you can also turn to your friends and family. Nobody likes asking friends for money, and familial relations of present day are rarely all they could be. Regardless, if you’re passionate about your request and really believe in your success, the people close to you might choose to put their savings to good use – heck, you can even offer them a job at your company or a place on its board.