A solid plan and the right contacts will get you started. Obtaining start-up capital for a business can be a daunting task. While money is available for entrepreneurs, remember that every business entails risk. You’ll have to show potential funders that you have researched every aspect of your proposed venture. Things to consider when financing your new business include: developing a business plan, start-up capital, funding options, investors, grants, community sponsors, equity financing and debt financing.

Here’s where to start:

DO YOUR HOMEWORK.

Most of businesses fail within the first two years. The more groundwork you do now, the better prepared you will be financially to weather the inevitable crises that most start-ups undergo.

A good first step is to determine what it will cost to launch and sustain your business. When you do, you can proceed to:

CREATE A THOROUGH BUSINESS PLAN.

This document, when given to potential lenders, should break down your start-up costs, outline sources of revenue, describe why your product is necessary, describe your target audience and project hoped-for profits.

Purchase software such as Business Plan Pro 2007 to get started. Never skimp on time or money when developing your plan.

GET THE TEAM TOGETHER.

Having the right team shows potential funders that your business is getting the guidance it needs.

UNDERSTAND YOUR FUNDING OPTIONS.

You need to decide between attracting investors (equity financing) or seeking a loan (debt financing). Traditional lenders offer various loans and lines of credit, often in exchange for your personal financial guarantee in the event of a default on the loan.

This option provides borrowers with autonomy but requires regular payments.

Equity financing is employed by most start-up businesses. It can come from personal acquaintances, family, or venture capitalists. Investors front you money in exchange for a portion of the profits, but they also can influence the business if it isn’t performing as projected.

KEEP THE FINANCIAL DOORS OPEN.

Make it known to everyone—family, friends, colleagues, financial people or the people who know them—that you’ve got a business plan and you’re ready to make it work.

Look into grants and community sponsors, read all the available literature from the SBA and ask other business owners for tips. Even after you have a business up and running it’s important to keep up your contacts in case of a crisis or an opportunity to expand.

THE BOTTOM LINE:

Establish your goals, calculate the risks and anticipate any potential problems by doing your homework and creating a business plan. With your hard work and honest assessment of how to minimize risk, you’ll help lenders and/or funders feel confident about investing in your new business.