Running a small business in today’s economy is no easy task. According to Forbes, around 80% of small businesses fail within the first 12-18 months. Without a doubt, running a business requires a great deal of determination, passion and patience. But if you have an idea for your own start-up, don’t be deterred from opening up shop. Some of the biggest companies in the world began right where you are now and they had their tough times too. It’s important to realize that there will be difficult moments along the way but if you can get through them, you and your business will be stronger and better equipped for it. These hurdles can difficult to overcome, particularly if this is your first stab at the business world, but if you can stay positive and determined, your success will be all the sweeter.
Because of the general bad shape the global economy is experiencing currently, finding useful financing for small businesses can be easier said than done. People are afraid to invest in something that has a 50% fail rate. This can be especially true if your business is attempting to compete against a larger, corporate conglomerate. But don’t be discouraged, there are small business loans, business credit cards, and there are also grants for specific groups like women in small business, non-profits and educational grants. Try using social media sites or online crowdfunding applications like Kickstarter to help you build your business. You have to be creative with your fundraising and be prepared to not receive all the funding you initially set out to get, but if you can stay determined and work hard at raising the money, you’ve already won half the battle.
The New Year is the time when would-be entrepreneurs spring into action to get their companies started. One important piece of the entrepreneurial puzzle is getting funding for your business. As an entrepreneur, you face a challenging road, and one of the biggest challenges is finding a way to fund your company.
In the current economic environment, getting financing for a startup is very difficult. Many entrepreneurs go about this process the wrong way. They often have unrealistic expectations and think that getting funding will be quick and easy. Because of this, they go unprepared. Furthermore, they often pursue the wrong sources . For example, pursuing an angel investment won’t help you unless you are in a high growth industry. And, without collateral, most banks won’t give you a business loan regardless of how good your business plan is.
Because of this, more often than not they don’t get funded and their business fails. I know because I see this every day, but it doesn’t have to be this way. It’s a matter of reviewing your options and pursuing those with the greatest chance of success.
Before we review the list of financing options, I’d like to take a minute to dispel a common myth. Many entrepreneurs believe that only good ideas get funding. This is not true. Results get funding. And by “results,” I mean that the entrepreneur has already built a proof-of-concept business that is running at a small scale and producing results. Those businesses have a much greater chance of getting funded. Keep this point in mind as you seek financing.
By Keith Tully
In some situations a bit of creativity will be needed to facilitate a turnaround and get your company back to operating in a profitable manner. However, more often than not you won’t need to be an innovator to save your business, you’ll just need to consider some of the commonly overlooked recovery and restructuring options that are applicable and readily available:
1. Using Assets as Leverage to Obtain Financing
Even if you have poor credit you may be able to obtain financial assistance by using some of your assets (i.e. – equipment, inventory, real estate, etc.) as collateral in obtaining approval for a secured loan. However if you were to default on such an agreement then the lender would potentially have the right to seize the assets you used as a security, so keep that in mind before you put your home on the line.
Most entrepreneurs use one or many forms of small business financing to start a business.
Here are a few helpful ideas for what you can do to set yourself up for success:
- Decide What Type of Business You’ll Open