July 26, 2011
7 Ways to Finance Your Business
Sarah Shaw’s road to success had no shortage of speed bumps. After her first attempt at entrepreneurship failed, she learned from her mistakes and went on to launch a successful coaching company, Entreprenette.com.
The biggest lesson she learned the first time around? Have control of your finances.
“When you put [your financial status] in someone else’s hands, that’s the immediate downfall,” she says. Thinking her new business partner had better money managing skills, Shaw let her take charge of raising capital for her first company; they ended up falling about a quarter-million short.
Next time around, Shaw tried a different approach – obtaining two $250,000 loans from banks on her own, then reaching out to friends and family.
“To get a loan these days,” Shaw explains, “you need a solid business plan showing how the money will be used. Investors want to know you’re going to grow your business, not just float.” This is especially important, she adds, since banks that used to lend up to 10 percent of gross receipts lend about 1 percent now.
The SBA, which specifically loans to small businesses, is likely the best solution for entrepreneurs today, as they’re more open to applications than traditional lenders, says Shaw. “They’re looking for the most professional businesses out there so the loan can be paid back. Having a professional website, a high rank on Alexa and a Dun & Bradstreet number gives you credibility.”
Organizations like Make Mine A Million and Angel Capital Association also provide financial opportunities for entrepreneurs.
Bonus PINK Link: Why you should say 'yes' to your next career leap – skills or not.
By Caroline Cox
"Mistakes are the usual bridge between
inexperience and wisdom." Phyllis Theroux
*Supporting images from FreeDigitalPhotos.net, Idea go, Pixomar and Salvatore Vuono.