If you are planning on starting a new business or hoping to grow the business you currently own, there is a very good chance you’ll need some type of funding to get to next steps. There are many financing options available, but before you leap into the land of lending, take some time to research the following questions:
How Much Money Do I Need to Start?
No two businesses are exactly alike. Even in a franchise business, the money needed for startup funds can vary from location to location. Before you can begin to look at financing sources, it’s important that you understand what your financial needs will be. This might include ‘seed’ money, to help cover the costs of doing business in the first few months of operation, as well as funds to cover ongoing fixed expenses (rent, utilities, administrative costs, etc.) and variable expenses (inventory, shipping costs, sales commissions, etc.). Here are some tools to help identify your financial needs:
We include two Colmena66 blogs that can help you in the search for capital for your business:
● How to get money for your business? Part I
● How to get money for your business? Part II
Along the same line, we include some tools that can help you estimate your economic needs:
What does my Financial World look like?
Just as there are not two exactly the same businesses, you will not find two businesses that have the same financial needs. The money you will need as a startup business for a particular expense may be different from what an established business will need for something similar.
Are you a merchant Do you have a manufacturing company? Do you have a firm that offers specific services? The industry sector you choose will also affect the type of financing you can get. The more you know about your industry and current financial needs, the easier it will be for you to identify the types of funds that best fit your business.
What information will a provider need?
Unless you can finance your business completely using your own money, there is a great chance that you will approach a lender or investor for financing.
On our blog: 7 Essential Questions that Small Smart Investors Ask Startup Founders, you will find a list of aspects that a small investor will take into account before making the decision to get involved with your business.
What financing programs are available?
Since you have taken the time to analyze and understand your financial needs, it is time to investigate what are the best financing opportunities for your business. There are many types of loans that you could qualify for, but you can also consider borrowing from the people you know. Similarly, financing programs are available for select groups of people. In other words, these groups meet certain criteria to receive funding depending on the requirements of each source. Some of these include agriculture businesses and Puerto Rican accelerator programs. If you are interested in exploring financing options outside of traditional ways, you can search for private investors or sign up for small business competitions where the winner receives funds to start (this option is increasingly popular).
On our site we have an area for Programs that are being constantly updated.
Do you still have questions?
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