Starting Up A Small Business: Where To Get Funds

2007-03-08 10:33:40

( Business )



There are a lot of things that you have to consider when you think of starting up a small business. Competent professional advice from an accountant and a lawyer will guide you on what you should do and not do. The accountant will handle your business tax transactions and keep financial records. The lawyer can ensure your compliance with legal requirements of business registration and advise you on legal issues.

You must have read that a number of today's big companies started as small businesses. But there are also many small businesses that failed for various reasons. The largest obstacle you face as an entrepreneur to open for business is the need for startup financing.

Initial monies for license and fees, professional fees, supplies, wages, furniture and equipment, rent and other costs associated with starting up a small business can drain your personal funds. The expenses do not stop after operation begins because you will incur day-to-day operating expenses. You should also expect to lose money in the first two years of operation.

If you are starting up a small business without enough personal resources, you may have to borrow funds from other sources. Even if you have the financial capability, it is too risky to put everything you have into a business. You have to make allowances for business failure.

One good source of funds which is less costly and easy is your relatives and friends. You can treat the funds as business start up loans instead of equity interests. If this source is not available, your life insurer may accommodate a loan against your policy's cash value. You can also resort to a start up business loan from other investors; this can be a tedious process because you will have to prepare a business proposal and convince investors of the business' viability.


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