One of the toughest aspects of starting your own business is finding the money to get it started. Unless you have a car load of available cash to live off while getting your new venture started, you are going to need money. Even when starting one of those businesses that promise there is no cash needed, you still have to eat and pay utilities until customers begin knocking down your door.
You may have spent a lot of time and money putting together a great business plan and your personal finances are in terrific shape. However, after visiting several lenders you find that they may not be as enthusiastic about your business and your future success as you are.
The past may look good and the prospects may seem good on paper, but most banks will want to make sure that you will have the ability to pay off the loan on time. Basically, if you can prove you really don't need the money, they will give you the loan.
Depending on the type of business you are getting into, the failure rate for new ventures is exceptionally high and lenders know this. Even if you have a good track record at the bank, they enter all new business loans with a hefty dose of skepticism.
There is another consideration to raise money for your new business and depending on your personal record of being reliable and dependable, you probably know enough people from whom you can raise the capital needed to get underway through partnerships.
Essentially you are asking them for money with the promise of a share in the profits of your business based on sales, the dollar sales or by unit sales, and the payoff. If the business is successful this can be long lasting.
Your prospective partners need to know, however, that if the business fails, they are out the money they invest. They are not giving you a loan and there will be no repayment unless the business does well. The payback is calculated on the amount you need to raise and the amount each partner invests.
For example, you are going to sell widgets and after figuring the costs associated with manufacturing, shipping, marketing and sales, you will profit $20 from each one. You dedicate $5 for each one sold as return on partnership investment. For the sake of round numbers you are raising $20,000 and you have 20 people who give you $1,000 each, giving each partner a five percent stake in the profit.
For every widget sold, $5 is divided among the partners, based on the percentage of the total amount raised, which in this case would be 25-cents for each sale. The higher the monthly sales, the higher their return and once they realize their initial investment returned, any additional, continuing sales keeps the quarters rolling into their pockets.
Godfrey Thaxter is a Marketing Consultant who provides
articles, tips and resources to help new online marketers
get started right with their internet home business.
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