The spirit of entrepreneurialism is as American as baseball and apple pie. It’s also a driving force in our nation’s economy. The Small Business Administration (www.sba.gov) states that small firms compose 99.7% of all employer firms, but yet statistics show that 69% of new businesses typically survive two years and 51% of those survive only five years. As well, by now we’ve all heard that lack of finances is the number one reasons these companies close. Case in point, “Only the strong survive,” and money is your lifeboat! Let’s face it. If you don’t have the money to keep your business alive, the odds are stacked against you.
Don’t fret, though! Obtaining the capital needed to stay afloat is out there, even in today’s economic climate, but you have to be savvy enough to find it! I’m about to share three (out of dozens) of ways to obtain financing for your business (in no particular order of importance):
1. Private investors: Sometimes the best way to obtain the money you need to grow is simply by asking. I don’t mean in a, “Pretty please” type of way. Of course, serious private investors/venture capitalists/angel investors want to see a solid business plan outlining your financial needs, your method for growth, and your method for repayment. It also helps if you are including some of your own funds into the venture to show the investor that you are sharing the risk of potential failure.
“So, where do I find these investors?” Great question! The are all around you! A private investor could a family member, next door neighbor, church member, or the person next to you in the elevator. The point is: if you can inspire someone with the capital to invest in your sound idea, you’re good to go! The keys to this success are the confidence in your business proposal and the knowledge of your business idea.
2. Personally guaranteeing business credit: This by far is the least attractive, because of the inclusion of credit. Furthermore, the average American has credit far below 680, which makes it nearly impossible to personally guarantee any type of business financing. If you’re one of the lucky ones, you can use your good FICO scores as a “guarantee” to creditors that any and all money obtained will be repaid, or you are willing to face the consequences of having it report on your personal credit report.
“So, what if I don’t have good credit?” Another great question! Do you know someone with a good credit rating? Often times, individuals will partner up by simply adding this “credit partner” onto the corporation and obtaining financing using them as the personal guarantor. Once again, this involves a solid business plan for repayment and even more trust. Make sure to draft the entire partnership in writing and never into this type of Agreement without all parties involved knowing all of the potential risks.
3. Aged/Shelf corporations: This is definitely not a new idea. Banks are more prone to extend credit to a company with 5+ years worth of history versus a company that is 5 months old. That gives them more assurance that they’re working with someone that has stability and longevity. Understand that simply having an aged corporation does not guarantee the ability of obtaining funding. Do not let these scammers fool you into thinking you can buy a corporation that already has $1,000,000 worth of available funding that you can buy for $500. Does that even make any sense? Would Donald Trump sell a $20,000,000 company for peanuts? Of course not!
I have found the best solution is to buy corporations and add business tradelines to them. How do you do that? Well, that’s for you to research. Nevertheless, you must always make sure that you work with legitimate sources. Is it easy? No, but success never is.
All in all, it is not impossible to establish and grow a profitable business. You just have to have the right tools to survive, and money is definitely one of those tools. Equip yourself with the know-how to obtain the business capital you need when it counts.
“Failure is not an option, but ignorance is…” – M.J. Glover
AUTOPOST by BEDEWY VISIT GAHZLY
