Ask Entrepreneur

I have a great idea for a business, how can I raise the money to launch it?

Should I try to seek investors?
Having a good idea is important but it is only one step in the process of starting a business. There are many other elements that are required which include a business plan, a team, capital, a financial model and experience.

High net-worth investors and lenders will want to be comfortable that this new business has all of these elements (except maybe the capital part) in place before they write you a check for x amount of dollars.

In terms of your options for seeking financing, there are two types to think about.

Option 1: Seek Strategic Financial Investors

This can be an option worth exploring if you can find an investor (i.e. angel investor) or group of investors (i.e. venture capital fund) that are interested. In this instance, you will be giving up some equity but these financial investors are generally very helpful.

They offer industry expertise and a strong network of contacts which will allow you to grow internally as well as having the opportunity to form strategic partnerships with larger companies. Keep in mind that it can be very difficult to obtain financing from these investors but if you succeed, it can be very helpful.

Option 2: Seek Financing Options with Banks

You may have to go to several regional and community banks to find a lender with favorable terms but it is an option worth exploring. The Small Business Administration also sometimes offers attractive opportunities to obtain financing.

In working with the bank, be as forthcoming as possible regarding your history and your needs. Your banker, in turn, will tell you exactly the information he or she needs to present your "best case" to the bank's credit committee. If possible, use your past success or strengths as a way to market yourself which will help give the bank assurance.

Good luck with the venture and keep us posted on how it goes.

Share Your Thoughts

Today's Editor's Picks

About ASK ENTREPRENEUR

Ask Entrepreneur is a question-and-answer forum for and by the Entrepreneur.com community. Send in your burning business question, or comment on someone else's now. Have a Question? Ask Now

Topics (over 1000+ answers)

Ask Entrepreneur Q&A Hangouts

Google + Hangout With Shark Tank
Google + Hangout With Jason Falls
Google + Hangout With Angela Jia Kim
Google + Hangout With Grant Cardone

ASK Quick Tips