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SOURCES OF MONEY FOR STARTING A BUSINESS
Will normally want 2 dollars in assets for every dollar loaned, 1-2 years history,
and personal guarantee. Banks are not in the business of speculating on your
Requirements are much the same as with a bank. The government is not making a loan; they are simply guaranteeing a loan provided by your local bank. You can check out the requirements and get help with your loan application from your nearest SBA bank or Small Business Development Center.
Leasing equipment and office space can drastically reduce start up capital needed.
· Customer Financing
Many businesses are based on getting the order – and then perhaps 50% payment in advance and the balance on delivery.
· Supplier Financing
In the same way, it is very common to have a supplier or vendor provide the merchandise to you where you can display and sell it before actually paying for it.
With this model, you may be able to get total financing for a location and inventory while you are getting started.
If you have an agreement to sell T-shirts with the Chicago Bulls on the front, you will be able to sell the shirts before paying the Bulls their share of the profits. Also, having a major licensing agreement certainly strengthens your ability to get money from any of these other traditional sources.
Often in distributorships, you can go out and sell the merchandise, have it delivered; the receiving company pays the manufacturer who then pays you a commission
If you get a major order from General Motors; you can contact companies that will give you perhaps 85% of that money owed. They collect the total amount and keep the difference.
· Venture Capital
You hear a lot about this form of financing, but venture capital funds fewer than 1% of new businesses. They will look more at you, the individual, than just at the business idea or product. They invest in the person, and also want big, quick returns on their money.
· “Love Money”
More than 80% of new businesses are started with love money; money that people who know and trust you will provide. Not because they think it is a great idea, but because they love you and believe in you.
This is a great way to take orders, get the money, then order the product, pay a reduced amount for it, and then go deliver it to the customer.
Many people don't start their own business because they think lack of money is an insurmountable obstacle. If you have:
4. ______Imagination______ YOU WILL ATTRACT MONEY.
Financial resources don’t make as much difference as you might think. Research shows that unless the person has a household income of less than $10,000, all entrepreneurs are pretty much equal.
According to the most recent Bureau of Census data:
26% of business start-ups didn’t require any capital
34% needed less than $5,000
9% needed $5,000 - $9,999
10% needed $10,000 - $24,999
5% needed $25,000 - $49,999
4% needed $50,000 - $99,000
3% needed $100,000 - $249,999
2% needed $250,000 - $999,999
1% needed $1,000,000 or more
That shows us that 69% of all new businesses needed less than $10,000 to get started.
70% of the people on the street say they would like to start their own business. Why don’t they? There are three primary reasons:
1. ______Fear of Failure____
3. ______No Money_______
"WE ARE TOLD THAT TALENT CREATES ITS OWN OPPORTUNITIES. BUT IT SOMETIMES SEEMS THAT INTENSE DESIRE CREATES NOT ONLY ITS OWN OPPORTUNITIES, BUT ITS OWN TALENTS."
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