It seems that starting a business is a simple matter. You just need to choose a business model, register with the Federal Tax Service and open a current account. But this is not the case. The task of an entrepreneur is to constantly develop and expand the business. And to do this, you need money. Let’s look at 5 financing options, their advantages and disadvantages.
Use your own savings
The most obvious way to start a small business is to invest your savings. Some people save money to start their own business for several years. You can open a deposit and constantly save a part of your salary, gifts, benefits, and so on. Sooner or later, you will start working for yourself.
Pros | Cons |
|
|
Take a small business loan
It is very easy to get a small loan since the lender is practically not interested in the financial state of your business. But the borrower pays for such loyalty with a short term and high interest.
For example, Cash Advance Omaha helps you find a loan for any purpose. A loan is approved within a few minutes. Loan amounts usually range from $200 to $5,000, terms are flexible and good credit history is not required. Eligibility criteria are relaxed – you only need to be 18 yo, legally reside in the USA and have a stable income. Application is easy and convenient – you only need to fill out a short form on the website and get connected to the right lender.
Pros | Cons |
|
|
Attract an investor
An investor is someone who can give you money, resources, or equipment to grow your business. Do not confuse it with a partner. The investor finances your project for a share in the business, while he or she is not engaged in management. In fact, an investor will only contact you when dividing the profit. The investor has a stake in the company or profits, so you will need to keep him or her up to date, consult with him or her on important management decisions and development strategies.
An investor can be a venture fund, an individual, or a government fund.
To attract an investor, you need a business plan and “burning eyes”. If they are interested in your idea, you will receive money.
Pros | Cons |
|
|
You must carefully read the terms of cooperation with the investor. If you turn a blind eye to it, then your business will very quickly cease to bring you income and will only work for the investor.
Attract business partners
Think about it, maybe you have friends, acquaintances, or just like-minded people who also dream of their own business. It is easier to create a business together — everyone will contribute part of their savings. In addition, a partner is not an investor but a person who will work together with you. You do not have to regularly give money to an outsider who has not invested anything in the business except money to start.
Pros | Cons |
|
|
To simplify the work with your partner, discuss all the conditions in advance: how to share profits, who communicates with customers, who is engaged in promotion, who produces goods, and so on. And establish the order property division after the liquidation of the business — just in case.
Crowdfunding
Money for an individual entrepreneur or LLC for business development can be collected through crowdfunding – collecting money from caring people on a special platform on the Internet. For example, you want to run a solar-powered chocolate factory (kind of an ECO-business). You post information about your project on the Internet platform and specify the required amount. Anyone interested can donate any amount.
Donors do not get a share in the business, but usually, businessmen give them some advantages: discounts on products or free samples.
Pros | Cons |
|
|
Before you try crowdfunding, do some preliminary calculations. Remember that you will not receive all the money collected — the sites take commissions, the budget collects taxes, and the sponsors need to be rewarded with something.
Get state support
The state has set a goal to support small and medium-sized businesses. Therefore, if you are a novice entrepreneur, you can try your luck and get funding in various forms.
Programs, amounts, and conditions are highly dependent on the state, so it is best to contact local authorities, such as USAGov.
Pros | Cons |
|
|
Category: General
Tags: Business, loans, money