How to Finance a Business Consulting Firm
Every new business will encounter start-up expenses. As a new consulting firm, your business may run into costs specific to your industry, but the most relevant question centers on how to finance those expenses so your new consulting enterprise doesn't force you into bankruptcy before your first day of operation. Of course, the amount of financing you will need depends entirely on your industry, your firm's starting size, operational and marketing budget. With a smaller budgetary need, you will likely find less difficulty obtaining cash.
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Instructions
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Canvass your friends and family for investment capital. Present your relations with a one- or two-page summary proposal that details when they can expect repayment and under what terms. Always ask for donations first, but don't be afraid to actually conduct a negotiation for financing with your loved ones. Some good terms might include a percentage share of the first year's net profits, or a flat finance charge in addition to the repayment of their investment. Try to keep the deals simple so everyone stays on the same page.
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Liquidate personal assets to build additional cash resources. If you haven't put that RV on the road or that fishing boat in the water in the past 12 to 18 months, it's likely that selling it won't hurt your lifestyle a great deal, but it could get you closer to your finance goals. Think creatively, and don't be afraid to put your old comic book collection up for online auction in order to make your dreams come true.
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Reduce initial operating expenses by partnering with local well-known nonprofit organizations. If you can find an organization that fits logically, volunteer your consulting services through its group (on a limited basis, of course) in exchange for office space throughout the week. You might have to give up several hours of your time per week without direct compensation, but you can save thousands of dollars on low- or no-cost commercial space and get a big marketing boost and build consumer goodwill by pairing your name with the Urban League, the SBA, or a local church or charity.
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Visit your local bank to discuss a business loan or line of credit; use this more traditional option only after exhausting other options. In addition, before you visit a large national bank, try local or regional banks and credit unions, which are usually more receptive to lending to small, local businesses. Have a polished business plan and presentation ready. These institutions will require a clear understanding of when they can expect repayment, as well as a great deal of research showing how little a risk lending you the money you need would create.
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