Sources for your Start-Up’s Seed Money
When you have your idea for a new business venture and you’ve committed to getting your start-up company off the ground, you have to consider how you will get your seed money and operating capital. Obtaining the necessary funding to get your start-up going can be one of the most difficult and frustrating parts of a new business.
When calculating how much start-up capital you will need, think about paying for inventory, equipment, supplies, rent/mortgage, salaries, insurance and any other expenses you will face in the first year of your business. You may also need money that will cover the costs of researching or planning before your business is even opened.
Below are several places to consider obtaining your funding from:
- Financial institutions. If you have a good relationship with your personal bank or credit union, you may want to consider applying for a business loan. A financial institution that has a solid track record with you is more likely to assist with your business finances than one that knows nothing about you.
- S. Small Business Administration. The SBA was created specifically for the purpose of helping small businesses. Whether you apply for a loan or grant with the SBA, they provide you a wealth of knowledge in how to get your business off to a successful start. Know beforehand that generally all SBA loans require personal guarantees from the borrower/owner.
- Depending on the type of business you are starting, you may be able to generate start-up capital through crowdfunding websites. To learn more, please read our blog titled “Is Crowdfunding Right for your Business?”
- Angel investors. An angel investor is an individual or group of individuals who pay for your start-up costs in exchange for ownership equity or convertible debt. You should be able to conduct a search to locate angel investors in your state or region.
- Credit cards. Many entrepreneurs use credit as a means of financing their start-up costs. It is important to consider how quickly your business will generate the revenue to repay your credit cards and understand that you are making a calculated risk.
- Loved ones. You might be surprised at how much money you can raise by asking your friends and family to invest in your business. It is important to honestly communicate with your loved ones to ensure that they fully understand the risks and that they are willing to take them.
At Nielsen Law Group, we will not only help assist with what is the best structure for your business, but will also aid with the additional details that will foster a strong foundation and get you started on the road to success. Whether you need assistance forming your new business entity or establishing a more sophisticated corporation or non-profit organization we will be able to guide you the entire way. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.