The first and most important step in starting a new business is finding the money
necessary to make one’s business
ideas a reality. Unfortunately, some funding opportunities, such as grants, provide very limited capital.
A typical grant will not cover all the needed costs for a new business and are often
denied to entrepreneurs with for-profit enterprises. If the new organization is
a non-profit entity, then the chances of receiving grants are much higher. With
the many existing pros and cons of funding, the most common inquiry of prospective
business owners is how to go about finding the most appropriate type of funding
One way to find information about
small business funding is by finding helpful resources online. There are
a considerable number of sites that can provide topics about everything there is
to know about funding opportunities and how to go about receiving financial assistance
for starting a new company. If there are some unanswered questions, there are always
forums to visit as well as live help on many funding websites.
There are two common situations that
entrepreneurs may face when trying
to obtain grant funding. The first one is when the individual has a clear idea about
how s/he will utilize the grant. Due to the fact that they already have a solid
understanding of the dispersal of funds, they may have a higher possibility of obtaining
a grant to help start their new business as opposed to someone who is not sure how
the funds will be distributed. The second situation is when the outcome benefits
an agency of the government. In fact, there are some associations that can also
provide great resources to businesses in the fields of education, science, ethnic
organizations, etc. Often times, grants do not have to be paid back, making it a
very competitive option for many small business owners.
In an entrepreneur’s quest to find money, a bank loan may have to be considered.
Therefore, it would be wise to research different banks and the types of loans they
offer. By evaluating these different options, the small business will be able to choose
a bank loan that fits their company's financial abilities and needs.
Before accepting any loan, the entrepreneur must first determine if s/he will be
able to afford monthly costs. This is extremely crucial, especially since the fate
of any new business is considered a risky venture.
Entrepreneurs have to make sure
that payments are made on time or else they will be at risk for accumulating large
amounts of debt and having poor credit ratings.
Another option for small business owners is to find an investor who is
interested in partnering with them.
Angel investors and venture capitalists can
provide the entrepreneur with large amounts of money rather quickly; however, they
often demand a large ROI as part of the business deal.
In addition, they may also request part ownership in the new enterprise as well
as an active involvement in regular company operations. When
obtaining funding from angel investors or venture capitalists, the new business
owner will have the relief of not worrying about the expensive monthly payments
as traditional financial institutions offer.
Family and Friends
An entrepreneur can obtain startup funding by asking their family and friends
for some much needed financial support. This is a great alternative because family
and friends are often aware of how important a company is to their loved one. Family
and friends can make some donations as a start, and this can be a wonderful asset
to the company. Since the amount of money that family and friends can provide a
startup is often very limited, the entrepreneur will have to obtain additional funding
to meet the needed equity gap.
Anyone who is interested in obtaining funding for a new venture can easily
find such information online. Grants are often awarded to enterprises that are non-profit
and contribute to the fields of science, education, and research. Bank loans may
be another alternative; however, the entrepreneur must be able to make monthly payments
to prevent accumulated debt and poor credit ratings. On the other hand,
business investors may provide immediate funding and require no monthly payments but often
expect partial company ownership and a large ROI in return. Another option for funding
is by asking family and friends for financial help. They may not be able to provide
a large amount of pooled money, but it is certainly helpful in meeting the entrepreneur’s