Small businesses and start-ups don’t need to stay small forever. In fact, if you check corporate history, you will understand that numerous companies that began small are now big names in the market.
As an entrepreneur, you may face many challenges which include raising capital for the business. Lack of capital is one of the biggest issues that most small businesses face these days. To make things easier for you, here’s a step-by-step guide to running a startup and acquiring small business funding in California.
Step 1: Make a Proper Business Plan
Following a proper business plan from day 1 will help you run your business smoothly. Having a proper plan of action for your company will make it easier to achieve your short-term and long-term goals. Updating the business plan with time will help sort out the priorities and make the most effective decisions in favor of your company.
Step 2: Find Experts for Your Business
It is undoubtedly a huge challenge for anyone to handle all the tasks in a business operation. Therefore, it will be beneficial for you to hire professional accountants, lawyers, insurance professionals, HRs, and so on, rather than asking freshers and interns for help. You also need to hire qualified field workers to deliver good service.
Step 3: Get Proper License
When you are planning to run a successful business, it is necessary to have the proper license to operate smoothly. Many a time along with the business license, you need to have some additional permission and some insurance certificates to complete certain projects. You can take help from a professional to make sure that you have all the important documents required.
Step 4: Determine Your Funding Requirement Properly
To run a successful business, you need to understand how much working capital is necessary for your business. You need to consider all small and big things such as projects, safety plans for the workers, equipment, labor fees, training plans and so on. If your needs are genuine and have the possibility of profits, then you will get investors and bank loans easily.
Step 5: Get funding
Funding is one of the most important aspects of establishing and running a business. There are many methods for getting small business funding. Some of the most popular methods are:
- Bootstrapping: Bootstrapping is generally known as self-funding. It is an effective way to start financing for your small business. For the first time, it can be difficult for entrepreneurs to get investors without a proper plan of action. This is why it will be good to invest your own money, or you can convince your close ones to contribute. When you show the investors that you’ve invested your own money on this business, it boosts the confidence in the investors’ minds.
- Consider taking a Bank Loan: If you can show that you have started making money and there are opportunities for growth, then qualifying for a bank loan will not be that difficult for you. If your business is almost established, then you can go for traditional term loans.
- On the other hand, business credit cards are one of the most useful tools for start-up business owners. For businesses which are not established properly, short-term loans are also available. If you have a proper mission or goal, you can also apply for a grant. Now, you need to apply for small business funding based on your situation, your credit scores and considering the goal of your business.
- Debt Funding: You can also consider debt funding if you own a small construction company in California. Debt funding is basically borrowing money to raise your fund for the business. In this case, a lender will give you a loan and you need to pay them back with interest. For a small business, debt funding is helpful and easy to get. Your lender can be your bank, your family members or friends.
- Venture Capitals: Venture capitals are professionally managed funds. They will invest in your company if you can show them impressive potential growth of your company. They will invest in your business against equity. A venture capital investment can be perfect for small businesses which are already getting revenues. They will exit when there is an IPO or an acquisition. As they are experts, hence, they will evaluate the business growth and will also guide you in the proper direction.
- Angel Investment: Angel investors have a keen interest to invest in the upcoming start-ups. There are many well-established companies which get help from angel investors. If you are taking money from an angel investor, then you have to give your investor some equity share in your company. Apart from investing in your business, they will also monitor and give advice to increase the growth of your business.
There is no doubt that finding small business funding is one of the hardest parts of your business. But, the above-mentioned points can help you to get your fund. Once you have sufficient fund, then it’s time to fulfill your goal. We wish you all the best in all your future endeavors.