Research the business or its industry before starting it. Read various books and trade journals that provide information about the business or the industry. Schedule appointments with successful entrepreneurs who have succeeded in the same and seek advice on how they obtained financing for their businesses. Do not spend so much time finding information about the business. However, it is important to have some basic knowledge about the business.
Personal Financial Resources
This should be the first place to look for start-up capital. It may involve applying for an equity line of credit using an asset as collateral, reviewing credit card balances or scheduling an appointment with a financial planner to discuss the options available with money from retirement plans, stocks or mutual funds.
Schedule an appointment with a mortgage holder to discuss interest rates and terms of repayment. Use some of the money obtained through personal financing to persuade potential investors that the business idea is worth pursuing.
It is always a good idea to fund a start-up using personal financing. Once the business is launched and starts yielding profits, it will have more value to potential investors because it is a proven business concept. Potential businesspeople with no money can seek financial assistance from friends and family.
Banks and Financial Institutions
Some sources of start-up funds include credit cards, SBA and equity loans. Many banks require collateral to guarantee a loan. Businesses that are already in operation can obtain more financing using their assets as collateral. Individuals can also obtain financing by borrowing against investments like investment securities, real estate, vehicles, arts and stock portfolios among others.
These investors have attained certain financial and professional experience. Many angel investors belong to investment groups, which advice businesspeople on how to create business plans and present them in ways that investors would appreciate. Not all companies that obtain advice from angel investors obtain financing, but the application process provides useful training for potential entrepreneurs.
The Business Plan
Choose a business plan that guarantees immediate profits. For instance, instead of buying relevant equipment immediately, obtain equipment finance for the business while putting all the effort into building a customer base. In addition, hire contractors on temporary terms to undertake certain tasks instead of hiring permanent employees. Equipment finance and outsourcing can help the business make substantial savings on social security and Medicare taxes.
Apply for business loans or other forms of outside investment once the business proves that it is a profitable venture. The period between starting a business to realizing profits varies depending on various factors. Some may take months while others may take years to realize profits. In any case, investors are likely to provide business financing if entrepreneurs can provide proof that their businesses are profitable ventures.