Regardless of the type of business you are operating, you will need start-up capital to get the gears running. If you’ve been operating for some time now – say, a year – you might be already thinking about expansion via office renovation or a new rental space. You might also want to start upgrading your machines – all the business tools you’re using to improve your processes.
Some typical start-up costs facing new business owners include:
- Electronic equipment: computer, printer, scanner, fax machine, photocopier, etc.
- Office supplies
- Furniture and fixtures: desk, lamps, bookshelves
- Reference books
- Corporation fees
- Legal fees
- Security deposit for renting a business location
- Manufacturing machinery and equipment
- Advertising: domain name, domain hosting, mailers, website design, etc.
- Operating Space
What you need to purchase can also depend on the degree to which you want to put a line between your business and personal life. Many people use their personal vehicle, mobile phone, and room in their own house to meet business needs inexpensively. Incorporating to separate your business assets and liabilities from your personal ones costs a bit of money, but it offers an extra layer of protection if ever the business fail.
Where to get your start-up capital. How much financing you can afford to risk on your business from your own savings and how much money you need to put into the business will determine if you need to look elsewhere to raise capital. It’s worth looking at alternative providers like Kikka who offers unsecured business loans and one-day assessment of businesses for eligibility.
Here are some potential sources of capital:
Personal savings. Most business owners turn to their own savings to help pay for startup costs. Obviously, you won’t incur any interest expense when using your own money to finance any part of the business. You won’t also have any creditor to pay back and no one will come after you for money even if your business fails or isn’t as successful as you expect. However, you may not have this or have saved it for retirement or rainy day fund. You have the option to tap your home equity, but it’s a big risk to tie the success of your business with your own home.
Business loans. Banks can provide business loans to finance equipment, real estate, vehicles, and other business expenses. For this, your business needs to be owner-operated, for profit, organized as a sole proprietorship, professional partnership or bona fide corporation, and fall within the size guide set by the small business administration (SBA). Special SBA loans are given to veterans, active duty military, reservists, national guards, as well as the spouses of people in these groups.
Venture capital. Pursuing this type of financing means letting someone else, usually a stranger, into your business as a partial owner. If you want to retain control of your business, then don’t consider this. Generally, you won’t receive any profit yourself until your investors have profited first. On the flip side, the majority of the risks are also assumed by the lending party.
Business line of credit. This type of financing generally carries a less rigorous qualification requirement than most business loans. It’s similar to a business credit card in that it’s an unsecured loan, which means you don’t need any type of collateral to be approved. Most providers like Kikka can assess your business in hours and approve the amount you need to finance your business. If you hate business risks and love flexibility and speed to gain business capital, then this will fit you.
That’s it. It’s also important to talk with a professional business adviser to assist you every step of the way as you look for the right type of financing for your businesses’ expansion and upgrade. Best of luck!
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