Do You Have a Good Online Business Partner?Table of Contents
Creative Business Startup Funding
Given the number of financing options a small business owner has, he or she needs to get creative in order to obtain startup funding, especially in this economy. The goal is pretty simple—to obtain cash to fund a business, so you can make more cash. Although the goal may be simple, the solution is not. Funding a start up business today is becoming more difficult, especially given the fact that as a start up, your company most likely does not have more than three years of revenue in order to obtain a conventional loan from a bank.
Startup Funding
The objective of any startup is to succeed, and in order to do so, you need cash. So when your looking to entice friends and relatives to invest in your company, you’re actually asking them to do you a big favor. And they’re more likely to perform a favor for you if you establish trust with them, over a long period of time. One way to do this is to establish a relationship. Trust and business today is all about relationships.
Nearly half of all Americans are now members of at least one social network and spending more money while they are at it, double from just two years ago. Research shows that social media users spend more time online than the typical web surfer. In fact, heavy Facebook users spent an average of $67 online during the first quarter of the year–compared with less than $50 for the general net citizen, according to recent study. Anybody see a trend?
More and more people use the web to make purchases, comparison shop, find directions to a local business or buy their insurance on the web, the fastest growing marketplace ever. But think about your own web use habits. When you purchase something online, do you purchase from unknown companies and individuals, or do you acquire goods and services from people you know–people you have a relationship with and with whom you share a history?
Sales, discounts, and testimonials…oh my!
A recent study revealed that 59 percent of consumers rated “personal advice from friends” as the most influential source of information for their purchase decisions, and 51 percent of Twitter users reported they follow companies, brands or products on social networks. Funding a startup is synonymous to building a social community. Funding a startup is like climbing up a flight of stairs…It can give you the money (and connections) you need, and set yourself up for the next funding source. As a startup funding your new venture is an uphill challenge, one that is a collection of tests, such as funding the startup phase, then growing the business with new clients and customers after launch.
So, to start, look for funding options for your new company that show your partners and future clients your concern for their future, their investment in your company, and their overall satisfaction with their decision to invest in your startup. What to look for?
Financing a small business — simplified:
- Start with a business plan and a presentation. Approach family and friends with your business idea. Ask them for their help and encourage their involvement.
- Working capital financing is helpful and often times easier to obtain than regular small business loans. Any type of business is eligible for a working capital loan.
- Bridge loans – A bridge loan is helpful for businesses that have a specific project in place that needs to be completed quickly.
- Preferred stock
- Government grants
- Venture debt
- Customer financing
- Vendor financing
- Capital equipment loans and leases
- Credit card cash loans
For obvious reasons, #10 is the least favorable of the financing options given. Usually credit card companies charge high interest rates, which makes for expensive money.
Consult a professional
As with any business decision or legal move, it is suggested that you consult with an accountant and an attorney before making any decisions which could impact your business and personal finances.
Economic recovery
Hard to believe, but according to leading financial gurus, the economy’s been in recovery since June 2009. Unfortunately, a big reason for the stagnation so far has been, well, you. Tons of people–71 percent–are waiting for economic indicators to rise before they’re willing to hire and spend. But waiting around to start a business that you have had on the drawing board for quite some time can change the overall calendar of your future company.
Balance creates success
The key to long-term business success is balance. That’s what vendors and loan officers want so give it to them. A good business plan can effectively work if planned out correctly, tested, and re-tested. Also, play by the rules. The rules are laid out clearly by loan officers and are available for any new business owner to review at the local credit union.
Wait for the right time.
For some small business owners, a difficult economy can mean waiting for the right time to approach a prospective investor. Then, wait for the telephone to start ringing. It will – if you do it right.
