Q: What sources do you recommend for raising money to help with financing my small business?
A:While creating your business plan you should estimate your business’ start-up and development costs. Luckily, you can start many worthwhile small businesses with little capital. But you will need capital, and for some businesses, significant amounts.
Misconceptions abound about how much money a company needs to achieve its goals and sources of funding. The vast majority of small businesses obtain their initial capital from personal savings and family and friends rather than outside sources, such as banks and venture-capital firms. A Harvard Business School study of the Inc. 500 (fast-growing private companies) found that more than 80 percent of the successful companies started with funds from the founder’s personal savings. The median start-up capital was a modest $10,000, and these are successful, fast-growing companies! Slower-growing companies tend to require even less capital. Eventually, a successful, growing company may want outside financing to expand faster. Raising money from investors or lenders is much easier after you demonstrate that you know what you’re doing and that a market exists for your product or service.
Here are proven and time-tested methods for financing your business:
• Bootstrapping. Bootstrapping simply means that a business lives within its own means and without external support. This funding strategy generally forces a business to be
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