Advice on Financing your Own Business Idea

By Tl Kleban

Any and all business owners are faced with an uphill battle when it comes to starting their own business. The amount of hurdles you need to jump to find start up capital is almost frightening which is why less entrepreneurs take the chance on their dream start up. They face problems such as little or no customers, low profits, and basically no revenue. No one realizes the amount of energy and creativity it takes to locate the necessary funds. It's this access to startup capital which determines whether a startup succeeds or fails.

The most important step in starting up a new business is getting the necessary amount of funds and that means you will need to deal with your bank. Right from the start, you better have a good credit history since you will be submitting a personal financial statement. You may even be required to make an equity investment in your business. Here are just a few more pieces of advice you should be aware of for finding start up cash for your business:
  • The first thing you are going to need is a comprehensive business plan. This comprehensive plan outlines everything about your business idea from how you plan on developing it, how you will run it and how plan in doing financially. There are a large number of books and websites on the subject that can help you get started creating one.
  • Put together a well thought out and credible business model for your company. The business model should include detailed financial descriptions which include every aspect of your business.
  • Make sure it includes costs for sourcing or manufacturing the product, projected sales, and any marketing expenses to go along with general and administrative overhead.
  • You should have an idea of how much money you will need up front. This number should include expenses such as start-up funds and enough capital to keep your business up and running until you make enough to cover expenses. In the beginning you should try to have a small list of expenses until your revenue increases. The less expenses you need to pay out, the lower your chances are of running out of money.
  • Do you know what kind of investors you want associated with your business? There are a lot of companies which like to have powerful executives or financiers as investors, and then turn around and find them to be more aggravation than they are worth. Other business owners look to friends and family as a source of start up money. However, investing in start-ups can be risky, and relationships can become strained if they start to lose money.
  • If you have any savings, you will need to use it. Lenders and investors expect you to fund your business to the best of your ability. Nothing shows that more than financing part if not all of the business on your own and is the best way to retain control of it.
  • Ask your bank or credit union about a business loan. It is better to go to one that you are already established with than a new one since you already have a proven history with them.

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