Step 6: Find the Funding

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This is a critical step. You've got to find funding for your business but ensure that it's the right kind of funding. Yes, there's the adage, "beggars can't be choosers," but the fact is, you must be selective and smart when seeking money for your startup or it could turn your dream business into a nightmare.

To identify which form of financing is just right for you, think about your long-term personal and business goals and the type of business you're planning to launch.

Money comes in many forms, from tapping credit cards and taking equity out of your home to government grants and high net worth "angel" financing.

We dedicate a whole chapter to this subject in StartupNation: Open for Business to ensure that you understand what we call the "Goldilocks Approach,"a way for you to find the funding that's the right amount at the right time with only the right "strings"attached.

We will tackle seven ways to fund your business in this step:

1. Bootstrapping
2. Debt Financing
3. Grants
4. Friends and Family
5. Angel Investors
6. Factoring
7. Venture Capitalists

Ways to Fund your Business

Bootstrapping

Look no further than yourself to find the funding you need - perhaps using your savings, your initial revenues, credit cards, equity pulled from your home, etc.

Upside

• You maintain complete financial and operational control over your business.
• No equity-holders to pay off if the company hits it big.
• If you are able to use savings, you won't have monthly payments to add to your business expenses.

Downside

• If the business fails, you may face a lot of personal debt.
• Depending on the source of your personal capital, you may end up paying a high interest rate (if you use a credit card), or you may miss out on earning interest (if you use savings).
• Typically, this form of funding limits the amount of money you have for strategic purposes and the rate of growth of your business can be significantly slowed down as it starves for cash.