Financing a Business Startup
Read the posted articles (“20 Best Ways to Finance a Business Startup” and “You Can Bootstrap Your Startup From an Excel Spreadsheet” and answer the following questions in 4-5 pages.
1. What are the strengths and weaknesses of crowdfunding a startup?
2. What is the most “controllable” means of funding a startup?
3. Would you personally choose peer-to-peer lending to fund your startup? Why or why not?
4. What is “Agile Financing” and, in your opinion, could it work for you as an entrepreneurial engineer?
20 Best Ways To Finance A Business Start-Up
May 6, 2019 Chris Motola
When launching a business, the essential components of your success are the quality of your ideas and your willingness to put in the work required to see those ideas come to life. In the milk of capitalist meritocracy, the cream rises to the top. With gumption, know-how, and a little steely-eyed grit, there’s nothing stopping you from turning all that money currently languishing in your trust fund into a thriving business enterprise. Go ahead, make your mark on an opportunity-laden world!
Wait, what’s that you say? You don’t have a fat trust fund to draw from? In that case, looks like you’ll have to raise some capital. According to the Small Business Administration, the average cost of launching a start-up in 2009 was estimated (by the Kauffmann Foundation) to be $30,000. Obviously, different kinds of businesses have different funding requirements, but in the years since 2009, start-up costs certainly haven’t gone down.
The prospect of going, hat in hand, to beg for money from the holders of capital isn’t one that appeals to most entrepreneurs. It probably wasn’t the aspect of building a business that occupied your fever dreams growing up. Nonetheless, for those of us without inherited wealth, borrowing money to start a business is a necessity.
Let’s explore the ways you can get your mitts on some start-up capital for your new business venture.
Personal Assets
- Your Own Assets
Self-funding may not be realistic for many entrepreneurs. Yet the fact remains that (according to the nonprofit association SCORE) 57 percent of start-up business owners use their personal savings for start-up capital. It may not be the most appealing prospect — it’s always more fun to spend someone else’s money — but sometimes, entrepreneurship entails sacrifice.
You might not be flush with cash, but you can always try doing things to change that. You could sell your car and just use Lyft, or the bus, to get around. Sell your house and rent an apartment above a restaurant. Or keep the house and get a home equity loan or line of credit. Just be sure to make the payments, or else you’ll be wishing you got that apartment when you had the chance. (Excerpt)