The Small Business Administration estimated in 2006 that there were over 27million small businesses in the United States. Due the recent downturn in the job market, many people have started to consider to running their own small business to replace lost income. Still others have been bitten by the entrepreneurial bug, especially due to the opportunities the Internet offers to create an online business quickly and easily.
For many people who wish to start up a new business, the main obstacles are not enough time, money, or expertise. Some people can run a successful online business in only a few hours a day. Lack of expertise does not need to be an obstacle with so many online courses and free small business mentoring programs and guides both online and in one's local area.
Funding therefore can be the biggest obstacle to getting starting in a new business. However, there are a number of ways to find the money to start a new business, particularly an online business.
Grow a Business Organically
Don't give up the day job, but use it to start and gradually grow a new business. Begin testing the market gradually to learn about price points, the motivations of customers and whether or not being in business and carrying all of the responsibility is the right decision to make personally. Start with friends and family, gauging their response and willingness to pay for the product or service to be offered. Determine the return on investment in terms of time spent and profit made. Any profits made can be re-invested in the company.
Become an Affiliate Marketer
An affiliate marketer sells products and/or services from top-name companies in exchange for a commission. Brands which offer affiliate programs can usually be found in top affiliate marketplaces like Commission Junction or Linkshare. Digital download only products can also be sold through companies like Clickbank and PayDotCom.
Prospective business owners can choose a marketing niche that the know something about, for instance, electronics, and begin selling items in the space of only a few hours once they have a website up and running. They can also take advantage of hot sub-niches, for example the iPod or iPad, to hone their marketing message for even more sales. The profits can be spent, or re-invested in the company.
Borrowing Start Up Capital from Family and Friends
If the new business item or idea or item is so hot that it is sure to be a winner, consider borrowing start up capital from family and friends. Just be sure of the legal implications of getting them in on the ground floor, such as whether they will want to be paid back, or have a percentage owning interest in any new successful venture you start. VirginMoney can help keep borrowers on track with paying back family and friends in a formal way so as to avoid damaging personal relationships.
Finding an Angel Investor
An angel investor provides start up capital for small to mid-sized business start ups in exchange for a percentage of return on their investment, usually at least 10%. So for example, if a new business owner were to borrow $100, they would expect $110 back within a certain amount of time. Angel investors can be anything from silent partners to people with genuine expertise in a field with whom a new business owner would wish to consult on a regular basis.
There are a number of angel investor networks online, many accessible on the internet. It may seem like a far-fetched idea, but in times of volatile stock markets, people who wish to invest in something worthwhile will often fund start ups because they offer a better return on investment and there is some control over the money.
To get an angel investor, at the very least, the new business owner will need a solid written business plan with a detailed marketing plan, proposed budget and financial projections. The Small Business Administration website has many useful guides which can assist in drawing up a solid business plan to take to investors, to grant-awarding agencies, or to the bank.
Getting a Small Business Grant
There are many government grants available for start-up funding for small businesses, especially if the owner is a woman or an ethnic minority. Look online for available grants in the area of business planned, and carefully follow the application procedure.
Taking Out a Small Business Loan
Due to the credit crunch, it is not that easy to get a small business or personal loan, but it is possible to qualify if a person has collateral, such as their home, which they are willing to put up as security for the loan. However, they must keep in mind that the home is at risk if they do not keep up the payments on the loan. A small business loan will have more strict terms will want a detailed business plan. In both instances the borrower will need to have a good credit history.
Resources:
The Small Business Administration
Investment and Financing Strategies: Angel Investors by Jeff Hamilton
Evelyn Trimborn - Evelyn Trimborn is a freelance writer who frequently contributes to a number of blogs, including: healthful-goddess.com, ...
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