Doesn’t everyone dream of being an entrepreneur at some point in their lives? Who hasn’t had a flash of inspiration for an amazing product or service idea that could have made us a million bucks (or much, much more) … If we only had the money to start the business. Those who do take the plunge will be faced with many significant obstacles as they chase their dreams of starting the next Uber, Airbnb or neighborhood coffee house.
One of biggest deterrents of any would-be entrepreneur isn’t lack of creativity or drive but lack of startup funds. We all know money is required to get a business off the ground, but many business owners don’t realize how much until they get started. Asking for cash and convincing someone to give it to you in the form of investment is a skill in itself – one that many creative or technical types don’t necessarily possess, so they might never get past the application phase for ‘Shark Tank.’
But what if you had access to as much as $35,000 for you to use at your own discretion in the form of a personal loan?
Where does the money go?
Adequate financing from the very beginning of a business venture is not an issue that can be downplayed. Even with the most inflated estimates, many entrepreneurs find that they actually need twice the capital they originally believed.
Without resources, business owners will not be able to create a prototype, purchase equipment, get legal advice, hire staff (however modest), create packaging, market the product or rent space.
Most new small-business owners are advised to speak with a financial planner to get their personal and business assets in order. In a perfect world, it is often recommended you don’t take on the debt yourself; however, that is a luxury many entrepreneurs cannot afford. If you don’t have the cash yourself and can’t find an investor to fund you, you’ll have to borrow the money.
Getting a small business loan can require that you already have a lot of capital and a proven track record and be challenging to get for other reasons. The application process for a small business loan can be a prolonged, intrusive process, mired in red tape.
On the other hand, it usually takes just a few minutes to apply for a personal loan up to $35,000, and you can get the funds in less than a week.
One of the main reasons startups fail is because the entrepreneur didn’t properly plan for the time between starting the business and starting to make money. Running out of funds is a sure way to halt operations so make sure you are prepared for any eventuality to avoid this.
Get the word out
Companies need to hit several milestones in the startup phase that will demonstrate potential for scalable growth down the road. These benchmarks will vary from industry to industry, but could include a beta test that has received positive customer reviews or the completion of a proven business model.
Of course, the most ingenious product, service or idea won’t take off if no one knows about it. Even with savvy low-cost options such as social media, businesses will not be able to reach their desired audience if they don’t have a marketing plan. Getting the word out on your product or service is the first way to start growing but relying on new or social media is not enough; it can take a skilled, on-staff social media marketing expert months to get even modest traction. You will most likely have to pay for advertising your product or service from the beginning.
Use other money first
There are other ways to obtain funding, according to Business and Entrepreneurial News. Government programs are available to help businesses get off the ground. Competitions, such as the SXSW Accelerator Competition, where Twitter and Foursquare began, are also possibilities for those who have a new product they believe has what it takes to earn funding based on ingenuity.
Even if you have some startup capital, a personal loan can make sure you have backup funds, which can prevent you from making any risky financial moves if faced with an emergency. This can be the ideal solution to bridge the gap between the launch of your business and regular revenue starting to flow, which is a strong option for many because the monthly payments are usually quite manageable. Also, there is no prepayment penalty, so you can start paying down the loan quickly once all your hard work and sacrifice begins to pay off.
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