Idea Exchange: How Did You Finance Your Business
by ChristineL, Former Moderator
- Created: March 23, 2010, 4:38 pm
- Updated: February 10, 2011, 4:49 pm
You have a great business idea and a solid business plan, but how are you going to find the capital to finance it? Every entrepreneur needs to answer this question in order to successfully launch and operate their business. In this month's Idea Exchange, we asked our members to share their stories about how they financed their businesses.
Here are the highlights
Bootstrapping with Personal Savings: Janiye shared how she went from a salaried journalist to a freelance blogger by financing her own business on personal savings. Ccumminskc had a similar experience, in which he built up his photography studio with just cash - a sacrifice that paid off in the end. 'It meant a ton of patience and hard work. Spectacular growth was never my goal; I wanted to learn to walk before I ran. That meant I couldn't do things, like buy terrific new equipment or go on big, expensive marketing campaigns but I'm better off for it.'
Though using purely personal savings can limit the growth rate of your business and restrict your personal spending, avoiding debt is a trade-off that many small business owners can't refuse. Learn tips for bootstrapping your business in our blog, Small Business Cents.
- Loans Backed by Personal Assets: CharlesS took on debt and the risk of loosing his collateral in order to finance his business. He always made sure that his payments were on time, thereby improving his credit rating and reducing his debt. As dhorning commented, using your personal assets as collateral is risky, so make sure you know you can pay off your loans before you commit! Read more about collateral and business loans on Business.gov.
- Help from Private Investors: With a solid business plan, sweetcountryhom convinced her angel investor that her adult care home startup was a worthy business venture. The extra venture capital allowed her and her husband to start and expand the business. Read more about venture capital & equity capital programs in the Small Business Cents blog.
- Relying on Credit Cards: intmktr jumpstarted his business in college using credit cards, but acknowledged that doing so was a 'bad idea.' Luckily, he didn't encounter any debt issues since his company continued to make a profit. Read more about how to choose business credit cards in the Small Business Cents blog.
- Supplement Income through a Day Job: hakustunner worked at a cinema during the day to make sure that she had a steady income to 'foot the bills' of her online business. A secondary source of an income can help breathe life into a business, especially when start-up expenses are high. One of Business.gov's Industry Word guest bloggers tackled this subject in her recent article 'Don't Quit Your Day Job.'
Thanks to all the members who shared their stories about financing their small business. Feel free to take a look at the Small Business Loans and Grants Page for more information about loans, grants, bonds, and venture capital. For those looking for loans and grants, please check out the Loans and Grants Tool.
If you would like to read all the responses or see past idea exchanges, visit the Past Idea Exchange board.
More Ways to Finance your Business:
- Grants & Loans: Break Through the Myths & Find the Right Financing for Your Needs
- The Basics of Revolving Lines of Credit
- I Need Money - Where do I get it?
What's Next for the Idea Exchange?
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