You cannot make money without spending money. And while the phrase “operating on a shoestring” may sound appealing, the reality is all businesses need funds to move forward. Depending on the type of business that you envision, you will need different amounts of startup capital. For example, if you must manufacture and hold inventory, your startup costs will be considerable. Contrarily, if you plan to run a small virtual business with a drop shipper, then you can start for much less. Additionally, you will need money to live while you build your business, so you will have to factor those expenses into the equation, too. And when creating a business plan to show investors, they will want to see your salary in the wages.

There are many ways to getting funding for your new business. The first is through your own savings and retirement plans. While not all analysts believe that you should touch your saved funds, particularly your retirement fund, many people do take the leap of faith and liquidate their accounts in order to start new businesses. Likewise, others use lines of credit, and credit cards. While the interest rates can be costly, using credit cards may be the only means to starting a business for some.

Another way to getting funding for your new business is through a financial institute. Many offer business loans, and with a viable business plan do approve monies for start ups. If the bank is not an option, or you do not want to disclose what you are planning to do with the funds, you might turn to your home and refinance your mortgage with a cash-out scenario. This way you receive the funds you need, but, you do not have the same restrictions placed on the loan as financial institute business loans because your home is the mortgage holder's collateral. Like credit cards, though, you could end up paying a lot more than expected. Your initial interest rate may be favorable, but if you have taken out a twenty-five year mortgage, the total interest on that loan is going to be staggering versus the four or five year business loan that you might have applied for at the bank.

Government grants are available for specific types of businesses. Often, if the government wants to encourage a certain direction, it offers grants for businesses in that field of endeavor. Environmental advances are an excellent example of this type of grant. The government also offers programs to indigenous people and minorities who qualify for grant or loan programs. At any given time, there may be many available programs. One caution with government grants, though. You will find ads all over the internet and in newspapers to send money to find out how to get these loans and grants. Be careful with these “how to” manuals and lists. Often, they are not accurate, and are in fact out of date. Your money is sometimes better spent using your time wisely to do your own research.

Finally, you might be able to find investors, either through family, friends, and the community, or through corporations such as investment or equity firms. What you have to be careful with in the beginning when starting a company is that you do not give too much away. In other words, the amount of capital invested should directly correlate to the return on investment or the amount of equity given. Often new business owners are so eager to obtain financing or funding that they give away fifty or seventy-five percent of the company. Then, when the concept takes off, they realize that they have given away their businesses because the valuation of the company is now so high.