As an entrepreneur you need tips to start a new business so that you can learn from the mistakes and success of others. Once you have decided that you are going to take the plunge and open your own business the next big question is how will you do it. Unless you are independently wealthy you will likely need some help financing the start up costs of your venture.
There are several options available to finance your business and the one you choose has to suit your particular needs. Just as no two businesses are exactly alike neither are their financial requirements. As such you have to carefully examine the options and then pick the one or combination of them that will give you a strong foundation for success.
The financing option you choose may also be dependent upon the type of business you plan to open. Certain products and services can qualify for government loans or for business grants.
Financial Tips To Start A New Business
Grants – Entrepreneurs can apply for grants through the government or through private foundations. If your business is aimed a developing new technology or to open a non profit organisation you might qualify for a grant from the federal government. If you are a private individual you may be able to get a grant from the state government. Another option is to look into grants from private foundations. There are a lot of requirements you will have to meet in order to earn one of these grants, but if you get one it will have been well worth the effort.
Small business loan – A small business loan is relatively easy to procure. They are guaranteed by the government through a commercial lender and are intended to assist people just like you who are willing to risk it all to open a small business.
Social lending – Social lending is gaining in popularity as a non traditional way to open a business. It is one of the often missed tips to start a new business. It is peer to peer lending that usually offers a fair and fixed interest rate for three years. To qualify for this type of lending you must meet a credit score requirement. Your interest rate is then based on your score, the amount of the loan, and the amount of outstanding debt. The short term and fixed interest rate help you to plan financially and be disciplined in repayment of your debt.
Home equity credit line – This option breaks one of the cardinal rules of owning a small business in that it mixes your personal finances and your business finances. However, a home equity line of credit can come at a very low interest rate and can qualify for a tax deduction. Be sure to shop around for the best deal and not just accept whatever your regular bank offers. Credit Unions are non profit so they can often offer the best rates, if you are not already a member of one look around to see if there is one you can join and explore their rates.
Credit cards – When you are opening a small business a credit card is a necessity. Even in terms of financing your start up costs they can be a good option because they offer rewards like insurance and cash back to help offset your costs. Some cards even have introductory offers of zero interest for twelve months. If you manage your money well and have some success you may be able to finance the start up at no interest with one of these cards. Just be careful not to spend more then you should because card debt, with interest, can quickly explode into an impossible bill.
As you look into tips to start a new business you will need to focus on these financial aspects more then most other factors. The failure to understand how to pay for a great idea and how to find the money to get from point a to point be can stop a small business before it even gets off the ground. Avoid this trap by taking the time to build a strong financial foundation first.