The Quandry of Start Up Funding

On Friday, I attended a business administration advisory committee meeting.  The advisory committee is a diverse group of business people from the service area who come together twice a year to provide input to the technical college about programs, new technologies and processes being used in their businesses,  and student interns or graduates’ (employees) skills (strengths and weaknesses). 

During the discussion of programs, I mentioned that the entrepreneurial programs are a concern because the placement rate (percentage of completers employed) is lower than preferred.  Despite the fact that many entrepreneurial students have a business idea and develop a business plan during their curriculum, they often do not have the funds and lack the credit to borrow money to start the business. 

One of the committee members suggested that the college develop a student incubation program where students could work on their business with support from the faculty and the college.  It was also discussed that students from these programs have excellent skills that apply to any business so regardless of where they may be employed, it could be said that they are employed in their field.  Both suggestions were good, actionable points. 

Along this vein, it also made me think about how individuals fund their new businesses.  Some people are fortunate enough to have savings that they can tap, they have something of value they can sell, or they are confident enough in their idea to refinance their home and use the equity.  Others borrow from family members.  While not advisable, some risk takers use credit card debt to finance their start-up.  Starting a new venture part-time while working another job also works for some people or taking on a partner.

Some people get more inventive such as restaurateurs sell naming rights to chairs, wear t-shirts advertising different businesses for a fee, pre-selling services and providing a coupon to the buyer, etc. 

Small business administration loans are also an option.  Venture capitalists or angel investors may be interested if you can demonstrate a sound business plan with high growth potential.