You have a great business idea. And your well-crafted plan is ready to go.
Now comes the even harder part: Finding money. Or, rather, securing the right type of financing.
It can be a daunting task. The U.S. Small Business Administration says "inadequate and ill-timed financing is a close second" among the most frequently given reasons why businesses fail. (Poor management is No. 1.)
But seed money is out there in many forms if you know where to look. And even if you find a source or two, there are big decisions to make.
Do you raid your savings? Do you take out loans? Do you max out your credit cards? Do you persuade investors to take a chance on your idea? And what about those new Web sites that seek to match budding entrepreneurs with investors, almost like dating sites?
It could be any of those options or a combination, depending on what is the best financial fit for your type of business and how much control you want.
"I have conversations with a lot of entrepreneurs, and the conversation goes like this: Should I be thinking about debt, equity or grants?" said Bo Fishback, vice president of entrepreneurship at the Ewing Marion Kauffman Foundation, a Kansas City, Mo., nonprofit group that encourages entrepreneurship. "It has to be heavily driven by the business case and what you need for your venture."
Take Amy Epstein, who wanted to open a floral shop after years of working at several Baltimore-area shops. Epstein, 32, didn't know where to turn so she went to see a SCORE counselor, who advised her to put together a business plan before seeking money. SCORE, a nonprofit group, partners with the Small Business Administration to provide free education to entrepreneurs.
Epstein pulled together $5,000 with help from her parents and her grandmother and took out a small-business loan of $60,000 from Columbia Bank on the suggestion of her SCORE counselor. She opened her Canton business, Crimson & Clover Floral Design Inc., in 2003.
"Looking back on it, I think I was so naive about it. I had no idea how much things would cost," Epstein said. In fact, she said, startup costs were closer to $45,000.
Her advice for new business owners: You don't need all the money right away. "You could start out small and as you make money, you could put money into it," she said.
Here are some general options and advice from entrepreneurs, investors and small-business experts:
