One of the most common reasons small businesses fail is insufficient capital. Perhaps a more accurate reason is poor capital structure (which ultimately leads to insufficient capital).
This article list the 12 best sources of business financing ranking them from the most attractive to the least attractive and why. This is a great, easy to follow resource for entrepreneurs who may be just diving into the world of business finance. An important aspect of finance the author brings attention to is the utilization of a few different sources of capital rather than just one. This approach can greatly reduce your company’s cost of capital and could potentially save your business from bankruptcy. Below is the list of sources, check out the article for more detail about each one.
Bootstrapping – grow without external financing
Internal Revenue Service – deduct expenses
Tax Increment Financing – real estate development in targeted areas
Small Business Innovation Research (SBIR) Grants – turn your intellectual property into money
Friends and Family – can be lenient investors
Vendors – financing from suppliers
Customers – advance payments from customers
Local and State Economic Development Organizations – offer low interest rates when lending in collaboration with a bank
SBA 7(a) Loans – most popular federally sponsored programs
Bank Loans – provide short to long term financing on all assets
Smart Leases – leasing fixed assets conserves cash for working capital
Angelequity – sell ownership in your business to an individual in return for funding
For more on initial business funding read The Art (and Journey) of Raising Funds from the WSJ, a short article about raising capital in these unique (difficult) economic times.
I am not a successful billionaire entrepreneur. I have not started the next Microsoft, invented the next breakthrough consumer product, or sold my business for a ridiculous gain. I am nota business expert by any means.
I am probably very much like you. A young, ambitious entrepreneur with a great interest in business, adventure, and living life to the fullest who is anxious to make his or her mark on the world. I am writing this blog as a source of information, inspiration, and entertainment for similar people to myself as we take the plunge into and entrepreneurial life.
Hope you enjoy,
Jake Adams
www.ENTREPRENANT.us