It's 2015 and the word 'startup' is a magical buzzword in our society. The word encompasses so many emotions: fear, greed, opportunity, risk, reward. According to a recent article by Inc., 63% of 20-somethings want to start a business. If you're looking to start a small business, keep reading. This post will give a step-by-step guide to opening a startup business with borrowed capital.
Getting a Business Loan
As convenient as it would be, venture capitalists probably aren't knocking at your door. But fear not - there are many small business loans available. A startup business loan isn't too much different from a regular business loan. The money is available. The Small Business Administration (SBA) has already distributed $18.75 billion for 2015 - and we're just over halfway through the year!
Focusing on getting financing should be the first step in your plan to open a small business. This is because without funding, your idea never takes off. Loans are also helpful because they keep you accountable. Loans require you to create a legitimate business plan, outline your goals, and sometimes even put your own skin in the game by presenting collateral. A loan makes the process real.
There is no such thing as cheap, easy business loans. Guaranteed business loans do exist, but they are not cheap. Remember, if money was easy to get - everyone would be rich. Any loan that is easy to acquire will not be cheap. Your business has yet to turn a profit. Your focus needs to be on getting funding while keeping costs low.
Knowing How Much This New Life Will Cost You: Small Business Loan Rates
Small business loan rates vary depending on the economic climate. You should focus on SBA loans because SBA loans are usually the cheapest loans to acquire. It varies, but a loan for <8% is not out of the question. Browse our small business loans page to see how many loans meet your interest rate target. Remember that when starting a company, you'll have to pay the loan back at, say, 8% plus pay business expenses, plus find a way to keep yourself fed. Choose your loan carefully. Let's move on to the next step after you feel financing is secure.
Do What You Can before You're Successful in Getting a Small Business Loan
While waiting for funding to come through, it's wise to do all the work you can. In today's world, most companies can do quite a lot with just a little cash. Many tech companies are making a healthy profit even before getting startup financing. Do what you can before receiving the outside capital. Try not to give excuses for why this can't be done. Excuses don't make good business sense. Keep in mind that getting funding does not also come with a breakthrough in work ethic. The work ethic should always be there.
After your company is running and you've acquired financing, it's time to keep increasing inputs and outputs. Decide how fast you would like to grow the company. It may take years or merely months, but eventually you'll have to start hiring people to do the work you don't have time to accomplish. Then you'll know you've arrived.
Final Thoughts about Opening a Startup Small Business
Funding is paramount. After all, money makes the world go 'round. Remember though, there is no such thing as easy business loans. Guaranteed business loans exist but are hugely expensive. I'm sorry to disappoint; these startup business loans take great effort - but the effort can pay off in a huge way! Good luck. Work hard. Invite me to your IPO.