Starting a Small Home Business

How to Finance Your Dream Part 1

September 8th, 2007 Filed under: Uncategorized — Small Home Business Author

After spending the weekend (and everyday really) acting like an unsupervised child, I decided to share my secrets for financing your dream. You see, up until last April, I was just like you. I had a job, family, stress, work life balance issues (with work winning most of the time) and tremendous fear about pursuing my dreams. Despite all of that, I took the plunge, faced my fears, and set out on my own. I can say unequivocally that it was the BEST decision of my life.

Early in August I conducted a survey on LinkedIn, Yahoo and Google on “What is Holding You Back From Your Dream”. I had nearly 3000 respondents and the top 2 answers were financing a small business and fear of failure. I decided to start with financing and will be running a series of articles on how to find money for your business. Edward Ing (entrepreneur and activist) said “Funding is seldom the most difficult obstacle standing in front of some wildly successful entrepreneur to-be, but it is always the biggest perceived roadblock. If you want it bad enough, you will make it happen.”

Part 1: Grab Your Bootstraps

Depending on Your Risk Tolerance and Type of Dream, using credit or home equity may be the fastest way to get started. Several years ago a couple in Saint Louis wanted to start an all year round, indoor batting cage and baseball lessons facility. They couldn’t get any funding from a bank so they applied for every credit card that came in the proverbial “junk mail”. After getting several thousands of dollars, they set out to build their dream. They started with one small steel poll barn and the rest is history. Right now, they have 3 locations and run all year round baseball lessons with former minor league baseball professionals and sometimes MLB pros. They are wildly successful in their market.

Funding options:

1. Use credit cards. This is how I did it and it can be very scary but if you have a good business plan and know that your market will support your endeavor, this is a very viable option. The key here is to “know your market”. The other point here is to get low interest rates through special deals or promotions.

2. Use home equity. This is a great way to finance your business with cash and have more time and lower monthly payments to get going. Of course, you will have to won a home and have equity for this to be an option.

3. Get and HELOC. This is essentially a line of credit, typically in a second lein, on the equity in your home. This is a bit different than a home equity loan…you only take out money when you need it and repay as you go.

4. Sell Liquid Assets. If you have stock, IRA, CD, or 401K you may opt to sell/redeem these to fund your business. Significant penalties apply but it is an option and may be worth it to achieve your dream.

Grabbing your bootstraps may be the best way to get started but may not be the best method over the long haul. It worked fine for me and for the baseball company that I mentioned. There are thousands of entrepreneurs that use this method and find long term success. The important thing is to have a solid business plan in a market where people are already spending money. Then sell them what they want, not what you think they need (this will be addressed in a separate article).

This article is available for republishing/copying as long as the author’s bio is intact.