When it comes to starting a new business, there are many things to think about. What type of business you are going to start? Who is your target market? How you going to raise the start up capital you need to get going? And many more…
The recent economic downturn has made getting approved for a Small Business Loan or opening various lines of credit even more difficult than it has been in the past. As a result, entrepreneurs need to think outside the box about alternative ways to get the funding they need to start their businesses.
Here are 3 ideas that might help you fund your business (or keep it afloat):
A factoring service allows you to borrow against capital which you already have coming in. For example, if you made a sale that will have your company delivering 200 products in one month, but you do not have the money for the products needed to meet the order, you can borrow money so that you can meet the delivery date. The tradeoff is that instead of receiving the payment upon delivery, you will surrender it to the lender. This will detract from your profit margin, but will make it possible for you to grow and meet future orders.
If you are unfamiliar with this term, bootstrapping is when you fund your startup with little to no money. You generate money on a need-to-survive basis. This option is best fit for entrepreneurs who are ready for the challenge, uncertainty and risk that this option entails.
Before you entertain the idea of taking your business plan to a venture capitalist, you must be sure that it is solid. If you’re already thinking, I don’t have any contacts in the venture capital world, here are two sites to visit: vFinances and FundingPost. Both sites have great resources that can help you polish up your business plan, work on your pitch and find different types of investor options that would be best for your business.
Many options exist when it comes to funding a new idea or keeping your business afloat. Please share with us in the comments any ideas, tips or resources you have found useful in raising capital for your business.
Shannon Suetos is an expert writer on point of sale systems based in San Diego, California. She writes extensively for an online resource that provides expert advice on purchasing and outsourcing decisions for small business owners and entrepreneurs such as business pos systems at Resource Nation.
Image Credit to the Office of Economic Development, City of Berkeley.