Starting Up with Angels, Loans, and Credit
Posted by David Liu on March 23, 2010 in Business Financing, Business Management, Business News, Business Start Up Advice, Financial Services [ 0 Comments ]
Financing a small business can involve many different factors, from finding angel investors to taking out loans to using equity investments to fund your company. While there are plenty of ways to go about your search, remember to start off clean, even if you intend to use your own investments.
For venture capital investing, or start-up companies, putting in your own money to finance a business idea can involve fairly high risks, so take the time to research and plan how you move forward. Make sure to be relatively debt free, at least in terms of being able to maintain your financial stability if your business takes an economic hit in the beginning.
Talking to business planning experts can help you determine whether or not you are in a good position to plan any business ventures. If you have any doubts, consider talking to a debt management program to figure out where you really stand financially, and whether or not you can use personal equity wisely. After you figure that out, look into ways to attain funding and move forward.
One way is to find Angel Investors for your business idea. Anyone willing to invest in your business in exchange for business equity or comparable stock is an angel investor. These financiers are usually large institutions that specialize in helping small businesses in certain markets, or wealthy individuals who have a stake in your success.
GoBig Network is a popular networking website for SMBs looking for angel investors. GoBig offers funding options for users from other members in the network, and they can communicate using the website’s member search. Programs like GoBig offer many helpful features for start-up as well as smaller businesses, such as chat forums on funding, help with filing resource requests, and even expert blog advice from their contributors.
GoBig does charge a membership fee, though, so anyone looking for potential funding should be serious before trying to network. Any attempt at a successful business should be seen as a weighted investment, so make sure you have a clear plan in your head about what you are looking for and expect to share with your potential business partners. Starting a business with your own money can be complicated enough, let alone with people who expect gains in return.
If you’re still early in your planning, there are still plenty of options for entrepreneurs, such as other free networking sites (while GoBig charges, keep in mind that they also boast the largest community of investors on the web), or using your equity as collateral (such as your home). If you don’t have physical equity, you can also use your second greatest asset: your personal credit. There are many options to applying for personal credit loans, and maintaining a good credit score may be one of the single most important factors. The majority of loaners and financiers look at your credit, combined with your business plans and your ability to repay the money before deciding. So plan ahead and keep your record clean (this is one of the best ways to convince your loaners that you’re capable of returning their investment).
If you get rejected, and this can happen to anyone, don’t let it get you down. Find out why you were rejected, and figure a way to improve your chances the next time you’re facing a decision board. Many start up companies can manage to get by just on networking relationships for the first few years, so make friends, keep them, and plan accordingly. Keeping a business has many aspects, but starting one will depend mainly on how you approach it from day one.