Can You Handle the Risk of Starting a Business?

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You have a dream of starting your own business. How much are you willing to risk? You need to have a nest egg before you start your business. No matter how great your idea, there will be more bills than income for a while.

Most major companies start with funding in the millions. They convince venture capitalists (VC's) that their idea is going to make a lot of money. The VC's take part of the business stock and hand over money with an agreement that they will get it back and then some.

Most of us start out hoping that the money will start to come in at the same time that the nest egg is running out. Making sure that this happens on schedule is a tricky thing.

Go into your business venture and do not expect to pay yourself a salary for two years. Your money that is earned will go back into the business to buy more supplies, equipment, product lines and advertising. If you are actually able to pay yourself a small salary in the second year, pat yourself on the back and celebrate (cheaply)!

If you find that your nest egg was not big enough, there are financing options. Hopefully, at this point, your business has made sales and has started building the bridges that lead to success.

Before you approach any family, friends or a bank with a desire to borrow money, you will need to tell them that your business is getting better. How much better will depend on the money source. Banks will want the most recent information you have, including your profit and loss statement and your projections for the future.



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