You’ve got a brilliant business idea. You’ve researched your markets and competitors. Maybe you’ve even written a kickin’ business plan. That’s all good, but to really get a business going, it is inevitable that you’re going to need some money. If you’ve got enough socked away to get your company off the ground, congratulations!
However, even a “low overhead” business such as hanging out your shingle as a consultant (like yours truly) is going to require some outlay for things like marketing (a logo, website, business cards) and business set up (company entity formation, a business license). And if your business is more capital intensive—for example, requiring things like software development, product prototyping, raw materials, inventory, staff, or a brick-and-mortar facility—then costs start to add up fast.
So that money is going to have to come from somewhere outside your little baby company. For the benefit of CorningWorks’ clients, a couple of years ago I had put together a summary of all the various start-up funding sources, and updated it periodically. They tell me they’ve found it useful, so I’ll share the information here.
First, let me explain that there two main categories of funding: Debt and Equity. As you probably already know, debt is any money that will have to be paid back directly according to specific terms. Equity funding means that you give away a portion of ownership in your company in exchange for the funds received. Debt financing is by far the most common form of financing, whether formal loan from a bank, hitting up your parents, or just charging start-up expenses to a credit card (that last option is not recommended, by the way!). Additional forms of funding include grants and crowd-funding, but these types of financing are a little more specialized and aren’t a viable option for all businesses. Depending on the specifics of your business, strategic partnerships, factoring, and other more unique finance options may also be available.
Some of these financing options are better suited to high-growth start-up companies, some will be a fit for an established small business looking to expand. CorningWorks offers a brief (free) consultation to help determine what funding pathways may be right for you.
So that’s a quick overview of the financing landscape; I’ll discuss more of the details, pros, and cons of all the various financing options in future posts . . . stay tuned.