At this point you have calculated how much money you need in a commercial checking account to fund your business until it reaches a positive cash-flow. Now you need to obtain financing. To finance simply means to provide funding. Funding can come either from your own resources or from other resources.
Your business has the best chance of success if funded by your own resources (non debt related). This way you can focus on making your business profitable without the burden of debt or a partner. Resources can come from personal savings or the sale of stocks you own. Selling personal assets such as a boat or an extra car are also ways of raising capital. If your business is successful you can buy new boats and new cars.
If you are not able to fully fund the business from your own resources then you will have to resort to secondary sources. These sources can be personal credit cards, a bank loan, a business partner, or a silent partner.
Personal credit cards or bank loans can be expensive, but do allow you to maintain control of your business. Also, given the profitability of parking lot striping and sealcoating, they can normally be paid back quickly at which point you have control over the business and no debt. Many banks will finance equipment and some equipment companies will finance the machines for you.
A business partner is another source of funding. Keep in mind that with a partner you lose control of the decision making process as well as half the profits. Never take on a partner that adds nothing but money to a business. You will regret it later.
A silent partner is another way to finance that leaves you in control of the business. However, keep in mind that they are still a partner and will get a share of the profits. If you go this way make sure to pre-plan a buyout agreement so that as you become profitable you can buy their portion of the company back.
Finally, whatever form of financing that you choose, make sure you get enough money to fully fund operations to a point of profitability. Remember, running out of money equals going out of business.
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Steven Cole (Economics, MBA – University of West Florida, Business & Innovation – Stanford University) 30 years experience in the parking lot striping business. Expert in reflective visibility solutions.