6 Ways To Fund Your New Business by Tim Knox
I'm often asked: what is the best way to finance a new business venture. This question is usually followed by "So, do you ever invest in new business ventures?"
The answers, respectively, are: 1. there is no "best" way to fund a new business; and 2. I do invest in new business ventures, but darn it I can't today because I left my checkbook in my other suit.
The truth is there are a variety of ways to finance a new business and which way is best for you depends totally on your product, your market, your financial requirements, your burn rate, and most importantly, your personal and financial situation.
So with that in mind, here are a few of the most common ways to finance a new business without hitting old Tim up for a loan. Keep in mind that all methods have pros and cons and some (or most) may not work for your specific situation. No matter what financing method you choose thoroughly investigate the ups and downs and don't jump in with both feet until you're sure you'll land on solid ground.
Savings and Investments
The first source you should consider tapping is your own savings and investments. I'm a huge fan of self-financing when it comes to business because it doesn't make you responsible to others should the business fail. The bad thing is that it if things do go under, it will be your money that goes down with the ship. If you're not willing to risk your own capital you certainly shouldn't be willing to risk anyone else's.
Friends and Family