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By The Hume Group Inc.

YOURSELF
You are the first and a necessary source of money. If your planned operation is modest enough, you may be able to supply all the capital yourself. (About 48 percent of small start-up businesses are funded by the owner.) But even if you can provide all the money, you probably shouldn't. For one thing, you don't want to tie up too much of your own funds, and for another, it's good to get experience handling borrowed money.

FRIENDS AND RELATIVES
After you have put up some of your own money, friends, acquaintances and relatives are probably the source to consider next. About 13 percent of entrepreneurs obtain start-up capital from this source.

When you borrow from people you know, everything starts out on a friendly basis. Your lender isn't some grim bean counter in a business suit. Instead it may be your Aunt Esther, your old buddy Sam from high school or a more casual acquaintance from your club. But be aware that once the loan is made, the friendly atmosphere may dissolve. Money can do strange things to people. For example, you may find that Sam keeps calling up every day or so to see how things are going and to pester you with unwanted advice.

WORKING PARTNER
One solution to the money problem is to take on a working partner who makes an investment and shares the running of the company with you. The capital and skills of two people are combined. In an ideal arrangement the partners' qualities complement each other. One formula teams a person having expertise in the type of business with a money person. Another good combination is one person with administrative skills and the other with operational know-how.

If you're not the kind of person who can do it all, face the fact honestly. Identify your own strengths and weaknesses, utilize your strengths and "partner" your weaknesses.

Keep in mind, partners sometimes may fight and argue. This is healthy, provided the discussion stems from different experience, knowledge, temperament and ideas about the business, rather than personal reasons.

Although a partnership is easy to set up, have an attorney prepare a contract spelling out the rights and responsibilities of those involved.


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