While tracking your money on a daily basis is something we urge you to do, we also urge you to avoid having to constantly be out raising money. It’s one of the biggest distractions confronting entrepreneurs. But if handled according to a plan, getting access to capital can be minimized into a periodic distraction.
Ways to Fund your Business
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.
- 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.
- 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.
Debt financing requires that you qualify for a traditional bank loan (not common for raw startups), or that you find a bank that can provide you a loan with a SBA guaranty.