Unless you use the equity from your home for a loan, your banker won’t lend you money to start your business (unless you’ve had a successful business before, in which case, you’re probably in the wrong blog!) Coming up with the kind of funds your business plan says you’ll need is a real challenge. Consider three approaches:
1) Bootstrap it yourself, starting small-scale and then reinvesting any profits to grow the business. This approach takes longer than other ways to fund a business, but it’s all yours! It also lends itself to starting a business on the side before you quit working for an employer, if that’s something you can do.
2) Borrow money from friends and family. This is the most common approach, but a piece of advice here: Unless you specifically want your friends and family to be involved in the business, make clear — in writing — that this is a loan, not a purchase of equity in your business. And pay it back as agreed to avoid any hard feelings down the road.
3) Get creative. Grassroots Fundraising, an AllBusiness.com article, offers some good tips:
— Approach your doctors, dentist and any other professionals. Corporate lawyers often have contacts with individuals looking to invest.
— You should also network in the right circles where high-asset individuals might be. Join fund-raising committees for things like your local symphony, opera or cancer society.
As with all AllBusiness.com articles, there are a number of links on related topics at the bottom.