Seed money, start up capital, initial investment, buy in, investors, venture capitalists…… All words, concepts and ideas that introduce a new entrepreneur to the world of uncertainty and the importance of decision making.
I’ve found myself, as a small business owner, in the position of knowing that if I had capital I could capitalize on an opportunity. While many businesses can be self seeding or funded with little out of pocket initial investment, most will reach a point where an infusion of cash could sky rocket results.
Knowing when to borrow money for a small business, knowing how to borrow money for a small business, and knowing why it makes sense sense, is the mark of a successful entrepreneur.
Here are a few tricks I’ve learned for obtaining funding.
Have a goal and be started already.
What? Put yourself in the position to be able to say to a potential investor, ” I need 200k, I’ve already got 30k, and I wanted to talk to you before I get the rest…. Here is what I’m doing, Here is what’s in it for you”
If you would not gamble your own money, don’t be asking for someone else’s. Be upfront with the risk and be ready to match the risk with the reward for you venture capitalist or small business investor.
Form a Realtionship Before You Need It.
Try forming a relationship with an investor or two before you find yourself in the business of needing 100k plus for funding a small business. Investors are sometimes willing to forward short term loans between 10k and 50k and its a great way to break the ice, establish a relationship, and build credibility.
I always tell people, and its been my experience, that most good business ideas will seed themselves. Look at the existing businesses and entrepreneurs who might benefit from you business idea moving forward. See if these people are willing to invest in your idea for an exchange in special pricing or exclusivity. Just a thought.
Another important point to ponder when considering borrowing money to fund a small business start up is starting small. What a great way to hedge your personal risk, keep your own money safe and find out if the market is ready for you new business idea.