Attorney Kendra Stephen shares personal advice on how to raise money to get your small business off the ground.
You have a fabulous business idea and you’re eager to get started. But where can you find the cash to fund your dream? Kendra Stephen may have some much-needed insight for you. The attorney and founder of Fort Lauderdale, Florida-based Supra Legal Group chatted with ESSENCE.com and dropped some knowledge on how to secure the dollars you need to get your business off the ground. Take notes.
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How New Business Owners Can Raise Funds
One of the traditional methods of raising funds is to use the money in your savings account. That’s normally the old-school method. The next method is to get a loan from a bank or credit union. You could also try to get funding from friends and family. This is the option people tend to love because they are spending other people’s money in order to make money. This would be a good option if you don’t qualify for a loan because sometimes that’s hard to do when you’re not an established business. There are also the options of crowdfunding and pre-selling.
Another option is to use credit cards, but I would use caution. If the card is under your name it could be harder to file bankruptcy. It’s usually easier and better to apply for credit under your business’ name. This way, if the business goes under, your personal credit doesn’t go under. It’s always wise to separate your personal finances from your business finances. And if you’re going to apply for a loan, do so under the company name. Also, if you’re going to accept money from friends and family, conduct your transactions under the business name.
Separating Business Finances From Personal Finances
It’s really important at this point to have a lawyer because if you have agreements in place, you’ll want an attorney to review them. If you’re not reading the documents properly, you could be held personally liable for certain debts. If you are going to use other people’s money, you want to make sure your agreements don’t make you personally liable. You want to do this so that if your business fails it doesn’t take you down when it comes to your personal finances.
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Do's and Don'ts of Raising Capital
• Do be realistic. If you think you’ll only need $3,000 to start, you probably need $30,000. You want to make sure you have 10 times what you think you’ll need.
• Don’t forget to get agreements in writing. There’s nothing worse than when a family member or friend owes each other money, and they end up in court and don’t have any written documents.
You can find assistance from organization such as the Minority Business Development Agency and the Small Buiness Association.
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