You’ve decided that you’re ready to stop working for other people and start working for yourself — but where do you go from here?
According to the Small Business Administration, there are 28.8 million small businesses (with fewer than 500 employees) in the US. Likewise, small businesses account for a surprising 99.7 percent of US businesses.
The good news is there are plenty of success stories — but for many new entrepreneurs, finding funding can be a deal breaker. Studies show 27 percent of new business owners have trouble getting the funding they need to get off the ground.
Determining the Best Funding Sources
Just how much money will you need? And how should you raise it — through banks or private financing companies?
The Wells Fargo Business Index says the average business only needs around $10,000 in capital, while the Kauffman Firm Survey (which primarily represents high-tech firms) sets the number at $80,000. To make matters more confusing, a third of new, non-employer firms don’t have any startup capital at all.
According to the Small Business Administrations, approximately three-fourths of new businesses are funded by credit cards, business loans and lines of credit. To break it down further, financial firm Fundera reports that in 2016 large banks approved 23 percent of new business loans, small banks approved 48.7 percent, and alternative lenders (such as private financing companies) approved 60.7 percent.
One popular source of funding is the Small Business Administration (SBA), a government-funded organization that offers a wide array of financing solutions and loans for small businesses.
Because funding isn’t a one-size-fits-all proposition, your best bet is to get financial counseling from several sources, including the Small Business Administration, your bank advisors and your chosen lender. Then you can decide not only how much you’ll need, but also where to get it.
The Financial Importance of a Business Plan
Whether you plan to get funding from a bank, a lending company or a private investor, you’ll need to set up a comprehensive business plan that provides the lender with essential information, such as:
- Your mission statement and company description
- An overview of your product or service
- An analysis of the current market for your product or service (and possible marketing or sales strategies)
- Your company structure: Is it a sole proprietorship or LLC? Will you be president or CEO? Who else will be in charge? How many employees will you need?
- Financial information: This should include an accurate assessment of expenses, a description of all funding sources and loans and a realistic revenue projection.
Depending on your business, you might also need to include additional components such as licensing information, as well as legal documents such as copyright or patent filings.
Related: Startup Tips for Veteran Entrepreneurs
Staffing Your Business
No matter the size of your business, you’ll be investing not only a great deal of money, but also a significant amount of time in putting together and training your staff. To mitigate these costs, many successful entrepreneurs rely on staffing agencies to provide them with the help they need. A local staffing agency can offer qualified, experienced employees for your team, so you won’t need to worry about the risks of hiring someone you don’t know to handle your important accounts. As one of the nation’s fastest-growing staffing firms, Onin Staffing has immediate access to a huge talent pool of industrial and clerical staff for just about any type of business. All you have to do is let them know what you need, and Onin Staffing will take care of the rest.
Like many entrepreneurs, you’ll hopefully discover that owning your own business can be a rewarding — and financially lucrative —experience. The most important thing is to start off right by setting up a business plan and getting the advice, funding and staffing solutions you need from the best resources available.