Getting off the ground with a small business means to obtain funding. New Theory would like to provide some insight on how to raise the necessary capital you will need to start your business. Once you establish what you will need in terms of finance, the next step is actually go out and ask for the money.
Be sure to have the following ready when asking for money:
- Financial Statements
- Personal Financial Statements
- Business Plan
- Term sheet (if applicable)
- Projections
- References
1. Community Banks
Pro: Good at understanding small business and loan underwriting
Cons: May not have the vast array of services as a big bank does
Check out the Community Bank Directory: https://banklocal.info/locations
2. Venture Capital
Pro: Can be a large sum of money, as well as advice, and no interest
Con: You will most likely need to give up a large percentage of your company
Top 100 VC’s here: https://www.entrepreneur.com/article/242702
3. SBA (Small Business Administration)
Pro: The government guarantees up to 85 percent of the loan to the bank in the event of a default
Con: A lot of paperwork for approval
Here is their website: https://www.sba.gov
4. Crowdfunding
Pro: The demand for your services and the support of a crowd can provide funding when banks are not
Con: Since you are collecting money and investments you must be careful to not violate security laws and regulation
Top Crowd funding sitesL https://www.consumeraffairs.com/business/crowdfunding-sites/
5. Angel Investors
Pro: Great way to raise small amounts of money
Con: Angel investors rarely invest more money after the initial investment because of the risk of losing their own money
Connect with Angel Investors here: https://gust.com
All of these Pros and Cons, and the list in general, is very helpful when looking into funding options. The key is to ensure that you ask more than enough capital when starting your business. Many small business owners and entrepreneurs are too optimistic and do not account for shortfalls. What happens your prototype breaks, someone steals or simply a hurricane comes and wipes out your inventory. Point is that you will need to plan for the worst and hope for the best.
If you’re not able to secure the cash that you need, you might want to link with a marketing partner who will provide services in exchange for equity. My firm, X Factor Digital Marketing is always open to listening to new ideas:
Once you secure the necessary funds it’s critical that you supply a “use of proceeds” as to where the money is going to be spent. Depending on the nature of the relationship, you might want to have regular scheduled meetings with your investors so there is no surprises on either side. It’s also helpful if you invest some personal funds as it shows that you have some skin in the game and not just “sweat equity”. Best wishes on your journey as funding is a critical component of making your dreams a reality.
We would love to hear more about your small business ideas. Simply comment below!
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