So you've decided to start your own business. You have an idea for a product, you've designed and created a prototype and you're ready to start manufacturing and selling the item. But you spent most of your cash in development and now you need start up capital to get your business going.
There are various funding options available. It takes a little research to discover which is the best option for your new business. But with a little effort, you can find a financial partner who will support your marketing and production efforts.
So what options are available for acquiring start up capital? You've already determined that your own savings account isn't healthy enough. If you have a retirement account such as a 401k, you should consider starting with it. There is no approval process to go through. The funds are yours to borrow and do with as you please. And there's an extra benefit to using this type of funding: all the finance charges incurred will be paid right back into the 401k, helping it to grow even further.
But using your retirement nest egg as start up capital is risky. If the world doesn't stampede to your door to buy your product and the business fails, you may have trouble repaying the loan. In that case, your retirement savings will be gone. And if you can't repay the loan, a penalty may be applied by the IRS. So think long and hard about your potential for success before you draw down your future retirement income .
A bank may be the next logical stop in your search for start up capital. Big banks may seem like the sound option but you might have better luck with a smaller bank that is local to your area. A local bank usually has more time to spend with new entrepreneurs, and small business loans are their best business. But even they may be reluctant to risk lending a large amount of money to an unproven product.
Your next best source of income might be a member of your own family. Parents are often willing to lend start up capital to their adult children. They know your credit history and they aren't generally interested in making a huge profit through charging interest to you. But consider what effect a family loan might have on your relationship with your parents. It often won't be worth any possible strain.
What about the credit card in your wallet? It may have a high credit limit and it's certainly easy to use. But be careful. Using credit cards to fund a new business can get out of hand. Credit card companies usually charge higher interest rates than traditional lenders, and if you're late on even one payment, that interest rate could soar. So use your credit card only as a last resort.
If you're still in need of funding, consider a private investor. These are usually wealthy individuals who take pleasure in helping budding entrepreneurs. They can make great silent partners or even greater advisors. Consider who you know that might be interested in funding your enterprise and approach them with a detailed and professional business plan. If you don't know anyone who fits the description of wealthy and looking to invest, look online for private equity lenders. There are many out there and they are always looking for new investment opportunities.
You have many options to explore. Getting business or corporate credit involves research and planning, but it can bring great rewards-the largest of which is getting your fantastic product into the hands of consumers.
Corporate Credit Concepts specializes in Start up Capital. For more information about Start up Capital and how it might benefit your business, please CLICK HERE for a free phone consultation.