Getting off the ground with a small business means to obtain funding. In a recent article posted to entrepreneur.com, five funding sources are outlined-and pros and cons are given for each option.
1. Community Banks
Pro: Good at understanding small business and loan underwriting
Cons: May not have the vast array of services as a big bank does
2. Venture Capital
Pro: Can be a large sum of money, as well as advice, and no interest
Con: You will most likely need to give up a large percentage of your company
3. SBA (Small Business Administration)
Pro: The government guarantees up to 85 percent of the loan to the bank in the event of a default
Con: A lot of paperwork for approval
Pro: The demand for your services and the support of a crowd can provide funding when banks are not
Con: Since you are collecting money and investments you must be careful to not violate security laws and regulation
5. Angel Investors
Pro: Great way to raise small amounts of money
Con: Angel investors rarely invest more money after the initial investment because of the risk of losing their own money
All of these Pros and Cons, and the list in general, is very helpful when looking into funding options.
Networking is a Valuable Outlet for Advice
Aside from researching funding sources- go out there and network. Doing this may not directly bring funding to your business, although it may. Networking at start-up and small business events/conferences is a great way to talk to other people and hear what they have gone through when obtaining funding. Learn from others’ mistakes and gain helpful tips!
Description of Vator Splash:
“Like the original Splash event in SF, Splash NY is an entrepreneur and startup pitch competition focusing on high-profile entrepreneurs and VCs/angels in the New York area and East Coast hubs of innovation, from Silicon Alley, to Boston to Washington DC. If you want to see who’s innovating in this area, and see which emerging angels and VCs are funding them, this is a must-attend event. The startup pitch competition attracts some 150 applicants vying to get onstage.”
After attending Vator Splash, which is one of many networking events you can attend, I was surprised at how helpful and willing other start-ups were at discussing their trials and tribulations. I strongly recommend getting out there and talking to people one-on-one for some valuable business advice.