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Personal Source of Financing

When you start a new business the first source of financing you should go to is yourself.

Do you have money in the bank, assets placed in buildings or diamonds? If you believe in your venture you should use your own funds first. If you don´t, it will be difficult to borrow money elsewhere.

Many entrepreneurs have little money so they have to go elsewhere for funding.

Families and friends

Family and friends can be a good source of financing, especially in the early stage of your business when relatively small amounts of money are involved.

Several small amounts

Consider borrowing from several people rather than trying to get it all from one person. This way, you can ask for an amount from each person based on what they can afford to give you, and not on what you need.

You could:

• Write down the names of everyone you know, regardless of how remote the relationship. This might include family, friends, colleagues, mentors, teachers, neighbours, your dentist etc
   
• Circle the names of the people who have some insight into your character and/or personal and business skills.
   
• Think about a realistic amount of money each person might be able to lend you, and write down that amount next to their name.

Be realistic and professional. Your business plan is the proper tool to convince your friends and family that you are worth their trust.

Keep your day job until income starts to flow.

An alternative to borrow money is to keep your day/night job. It is hard to have two jobs but if it is the only way to finance your start it is worth the investment. Consider double jobbing an investment in your future.

Live on a rock

If you are married and the spouse has a job, he or she might be able to support your work. Cut all private expenses for six month and invest the hardship in your common future.

- Go to Sourcing from a Bank

Embrace surprises that arise from uncertain situations, remaining flexible rather than tethered to existing goals.
- Saras D. Saravethy, professor in entrepreneurship