Home | Contact | Advertising
Small Business, Information, Resources, Articles - SmartBiz.com
Members Login:
Sign Up Forgot?
SALES & MARKETING
Marketing Online
Email Marketing
Search Marketing
Selling
PR
ONLINE BUSINESS
E-Commerce
Website Creation
Productivity
Accounting
CRM
Web-based Software/SaaS
BUSINESS STRATEGIES
Case Studies
Smart Answers
Videos
Podcasts
Smart Blog
Human Resources
Management
BITS & BYTES
PCs & Online Equipment
Mobile Computing
Security/Business Continuity
Telecom/Office Networks
Small Business Products
FORUMS & RESOURCES
Free White Papers
Tools and Calculators
SmartBiz Forum
Legal & Business Forms
News Feeds
Featured Webcasts & Videos
Franchise Offers


 
SMALL BUSINESS AND STARTUPS INTERNET TECHNOLOGY RESOURCES
Search SmartBiz:
Forms and
Downloads
Free
White Papers
Special
Offers
SmartBiz
Blog
Free Email
Newsletters
Finance
How Much Money Do You Need For A Startup?
Email ArticleEmail Article
Print ArticlePrint Article
Increase Text SizeIncrease Text Size
Decrease Text SizeDecrease Text Size
Del.icio.us
Digg This
Bookmark and Share

By Steve Veltkamp

One of the reasons people don't start their own business, despite a desire to, is lack of capital and an uncertainty about being able to raise enough. Lack of enough capital is also a prime reason why many businesses fail. How much do you need? Yet, you don't have to be rich to start your own business. Surprisingly, more than 17% of all new businesses begin with less than $5,000 in cash. Lack of capital is often a cause of business failure, but not as often as lack of proper management.

Startup capital available at startup for companies now worth more than a million dollars:

Less than $ 5,000 - 17.5%
$ 5,000-$ 9,000 - 14%
$ 10,000-$ 19,000 - 15.5%
$ 20,000-$ 49,000 - 25%
$ 50,000-$ 99,000 - 15%
$100,000-$249,000 - 8%
$250,000-$499,000 - 2%
$500,000 and up - 1%

Many successful businesses, particularly in this modern service economy, are started without any capital at all!! There are people who literally lift themselves out of financial ruin by starting their own business.

The biggest problem with lack of capital is providing for your expenses long enough to become profitable. Many experts say you must figure on living off of your capital for at least three months. When figuring how much you will need, figure these monthly costs:

* Living costs
* Employee wages
* Rent
* Advertising
* Supplies
* Utilities
* Insurance
* Taxes
* Maintenance
* Delivery/Transportation

Multiply by 3 to obtain your costs for three months, by which time you hope to be profitable. Then multiply by 1.25. The extra 25'% is to cover the unforeseen, miscellaneous expenses that nobody could foresee.

Obtaining Financing

The most important thing you can do to obtain financing is to prepare a good business plan. This will be presented to banks, venture capitalists, even relatives that you are trying to get to invest. Once your business plan is done, go after the money. Be enthusiastic and optimistic. Nobody will believe in your plan if you don't.

Sources of Financing

The first place to tap is your own resources. Do you have savings? Can you get a second mortgage on your home? If you don't believe in your business enough to risk everything, you don't stand a chance of getting others to.

After your own resources, your family and friends are your best source of capital. After all, they know you and supposedly will want you to succeed. Banks will weigh you strictly on your merits, and the merits of your plan. Venture capitalists will go by the plan, too, but will want a hefty piece of your company in exchange for their money. Still, 51 percent of a growing company is better than 100 percent of nothing! Angels may come to your rescue. These are entrepreneurs who have been successful themselves, and now have money to invest in others with potential and drive. You can find them through networking, even ads in the paper!

Don't forget personal loans, and credit card balances. Many a small business has gotten started by Visa and Mastercard!

Add a Comment View Comments
Small Business Home

SmartBiz Shop
Promotional Items with Your logo
 
     
 
Smart Services
Spacer
Spacer
Spacer
Spacer
Add Your Logo Now
Spacer
Get Your Business Online
Build a Website Host Your Website Market Your Business Online
Business Form Downloads
Legal Forms Business Forms
Smart Forums
Recent Postings
Stimulus or "Pork"ulus?
Blog: How Do You Know What Insurance Is Right for Your Business?
If Layoffs Are Necessary, Protect Your Business
Blog - Do You Have Email and Internet Usage Policies in Place?
MORE
Home | Contact | Advertising
© 2016-2018 SmartBiz. All rights reserved. Privacy Statement and Terms of Service
Small Business Home | Business Tools | Online Business | Bits & Bytes | Sales & Marketing | Business Strategies | Forums & Resources
Email Marketing & HTML Email Driven By: Hosted By:   Design By:
Email Marketing
 
XML LogoRSS Logo
Receive our stories via SmartBiz XML/RSS feeds.
Include our stories on your website through SmartBiz javascript content feeds.