How to raise the necessary financing for your small business

You may have a great idea for starting a small business, you may see a gap in the market just aching to be filled, you may have a product that's absolutely sure to sell-but none of this matters if you don't have the necessary funds to get your small business off the ground. Let's think of a few ideas for raising those necessary funds.

1. Let's start with the first and most obvious way of raising the necessary financing for your small business. That is, creating a savings account from your current income specifically for financing your small business. Now, this is a more important step than some would-be small business owners realize. A great idea hits, and it seems as if we must get it in the marketplace now. And, as we don't have the money now, we hastily look for ways to get it overnight, expend a lot of energy learning that this isn't a realistic goal, and sort of peter out in the process. It might be a good idea to set a more realistic goal, such as, "I'd like to have this much money to start my small business six months from now," etc.

2. This, of course, implies another crucial step in raising the necessary financing for your small business: knowing exactly how much you need. Not only will this help you when it comes to earning the money yourself, it'll help greatly when you begin the process of attempting to find people willing to give you financial backing in order to get started. Such people will want to feel that you've done you're homework, that you know exactly where to put they're money, and that you're not merely using their money to experiment with. So, having a sound financial plan is a crucial prerequisite for raising the necessary financing for your small business.

3. When you've saved some money of your own and developed a sound financial plan, you're ready to start looking for investors, that is, for people who will see the sense and importance of your idea and provide cash to get it off the ground in return for certain amount of the profits should it succeed. Finding investors can be a matter of simply going to moneyed people that you know, and also a matter of approaching professional investors with your idea. The second approach will take a lot more homework than the first, but there is an enormous amount of helpful literature online (for example), to get you started and carry you quite a long ways.

4. Another proven method of raising the necessary financing to start a small business is applying for grants or loans for the government. The government, of course, is interested economically in seeing small businesses succeed, and has set up a system for helping energetic would-be small business owners onto their feet. As with all things governmental, however, there is plenty of red tape, paperwork, rules, rules about the rules, rules about the rules about the rules, and so forth, to navigate through before you reach your destination.

5. Again, there is an abundance of literature devoted to helping a would-be small business owner navigate such complicated terrain. In fact, one of the biggest reasons many small businesses fail is that they simply give up out of unwillingness to make the investment of time and energy necessary in such enterprises. We've all seen infomercials devoted to teaching one how to obtain government grants for starting a small business (etc.), and rolled our eyes and turned to another channel. But the fact is that the advertised literature really does work so long as one is willing to WORK. When trying to start a small business, one should think of it as one would think of getting an advanced degree in school or any other worthy venture in life. It's going to require most of one's time and attention for a certain amount of years to successfully do so. It's obtaining and keeping this mindset that makes the difference in raising the necessary financing for your small business.