So you’ve finally decided to do it — you’re going to start your own small business and see where you can go with it. But the problem right now is securing reliable startup funding. You need money to buy or rent the property, purchase enough inventory for you to start off, pay the bills, and hire employees. In general, to do all this you will need some form of loan, because the first few months are the most expensive — you’re just breaking into the industry, so you make very little profit with very large expenses until you figure out the exact plan of action.

To acquire startup loans and venture funding, you need to have investors and support. Startup funding is not easy to get. Many small business owners get their first startup loan from their family or friends, and this is great because you know you can trust them. However, you want to be careful when borrowing from people who are close to you because you are mixing up your personal life and your business life, and if something goes financially wrong, then that may pour into your personal life and cause all sorts of problems and feuds. Also, they are most likely not as well-connected with as many contacts as venture firms that will give you venture funding, and they aren’t considered accredited investors. You are regulated much less if your shareholders are entirely accredited investors.

You can also pay for your startup funding by getting yourself a job and being a consultant. If you start as a consultant company, you can eventually build your way into becoming a company that sells products independently. This method is much less risky because you are still going to make money consulting; it just takes time before your company will become independent. However, this way you can avoid taking out too many startup loans, which can potentially cause problems if your business fails to make much profit; if you have a family, this method may be for you.

Another way to get venture funding is to find a business angel. What in the world is a business angel? An individual who is very wealthy is called an angel because they can provide you with secure funding for your startup business in return for an investment stake. Angels are usually well connected people and can find you clients and contacts and customers, and even other investors to help with your startup funding, if your business prospects look hopeful. Business Angels are also accredited investors, so you can avoid all the legal stuff later on by starting with these accredited investors.

Now, to get funding (or retain funding), you’re going to need an exit strategy. That is, you either need to go public, or sell the company. Why do investors look for an exit strategy? Well, since they’re investing in you, they need their money back sometime, and if you have no exit strategy, you will simply be a monetary drain to them and they won’t want to invest in you or your small business venture. Thus, be sure that you have outlined your exit strategy before applying for startup loans or venture funding.