Reader Emelia wrote:
Thank you for your wonderful encouragement. I have a small graphic design company that I run out of my apartment. I would love to lease an office in town so that I can attract more customers. Can you please tell me how to raise some money to do that? Thank you.
Reader Vaughan asked almost the same thing:
I am really impressed with your blog so far because it is very educational, but I need some help. My main problem is financing. Can you help?
Dear Emelia and Vaughan,
This is probably the one question that I am most commonly asked. How can you raise money for your small business? Although we hear on the internet (hello TechCrunch) and in the news about small businesses raising a ton of venture capital to startup, the normal process of raising money to start or to grow a small business is via an infusion or loan of money from the business owner himself.
Most startup capital comes from money scrimped and saved by the small business owner before they started the business. Like with any savings scheme, someone looking to start a small business might put aside 10 or 15% of their income in the years leading up to their start. When you are only just beginning, it is highly unrealistic to expect that someone else will invest in your idea when it is still just that, an idea.
Once the business is up and running, most capital for small business expansion comes from the business itself. For nearly all small businesses, if they’re not self sustaining from the beginning, they never will be. If the business isn’t capable of selling and making a profit on their products and services in the ones and two’s, it doesn’t necessarily mean that they’re underfunded or whatever the VC catchphrase is, it means that no one that they’re currently marketing thinks that their product or service is worth the money the business is asking for it.
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