The number one reason that businesses fail is under
capitalization. The way you build your business capital is very
important but normally all small businesses require some capital
to get started. Depending on the business, you may only need the
capital for a short period of time to develop an inventory or
pay salaries. Other businesses may require facilities and
equipment purchases in addition to some operating capital to
cover business expenses until sales and revenues can support the
business. Here are 7 sources of capital you can use to get your
business on the right track:
- Personal Capital. This is the source of capital that
entrepreneurs turn to first because it's the most easy to use.
It's the cash on hand, bank accounts, stock, and other sources
of personal wealth that you can tap into for your business.
- Your Home. A home equity line of credit will allow you to
transfer the equity in your home to equity in your business. The
difference between the value of your home and what you owe could
be enough to cover your business start up expenses for a year.
- Bank CD. Do you have a CD in the bank that isn't matured yet?
Instead of taking the penalty for early cash out, consider
borrowing the money back, securing it with the CD.
- Retirement Accounts. You can borrow money from yourself
because it's easy money to tap into, and some of the interest
that you pay goes into your retirement account.
- Friends and Family. Try to avoid this source of capital
because of the potential relationship troubles if the business
fails. Your decision to borrow from friends and family is a
personal one, but it is often the easiest way to obtain
investment capital.
- Commercial Banks. When funding your business, commercial
banks provide the greatest flexibility for types of loans. They
will want to see your business plan, and usually six months to a
year of track record.
- Small Business Administration - Also known as SBA, is an
independent government agency formed in 1953 to help small
businesses. They provides loan guarantees, participates with
bank loans, and makes a limited number of direct loans.
I think the biggest problem that business owners have is that
they are perfectionists. They have started a business doing
something that they are good at but it is difficult to get staff
that can duplicate what you do. Therefore many business owners
tire out and after a period of time they are burned out because
they try to do everything themselves.
There are so many sources of capital out there to get your
business started but I hope you get the point with the few that
is mentioned. As a business owner and you're borrowing money at
the start of your business, you must be careful of what you're
trying to accomplish because if its not thought out properly
this can cause a strain on cash flows and income in order to
make debt payments.
About the Author: Colon Bolden understands what it takes to
create the best path for short and long term financial
stability. To have the opportunity to see why he offers the
greatest path and a solution to reaching your goals without all
the headaches, review this key information at
http://www.WeNetProfitsGlobal.com
No comments:
Post a Comment