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11 Ways to Finance a Start Up

The initial funding for a fledgling private business has often come from its founders. A budding entrepreneur might draw on a personal savings account to finance an indie film, or plunk down a credit card to pay for the machine tools needed to build a sample product or prototype. Well-known example: Convenience store clerk Kevin Smith sold part of his comic book collection and charged as much as he could on his credit cards to finance shooting for his 1994 film, “Clerks,’’ at the New Jersey stor

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Savings, Credit Cards

The initial funding for a fledgling private business has often come from its founders. A budding entrepreneur might draw on a personal savings account to finance an indie film, or plunk down a credit card to pay for the machine tools needed to build a sample product or prototype.

They did it: Convenience store clerk Kevin Smith sold part of his comic book collection and charged as much as he could on his credit cards to finance his 1994 film, “Clerks’’ at the New Jersey store where he worked, according to IMDb.com. He raised $27,000, including contributions from friends and family. The film grossed more than $3 million.

Advantages: You retain control of your project. You’re also proving to future funders that you’re willing to put your own money at risk to launch your business.

Cautions: If you’re not already keeping careful books, start now. Unequal financial contributions or sweat equity among the partners may change their views on the ownership shares they deserve. Clear agreements can avoid multimillion-dollar lawsuits years later if the enterprise takes off. Bogatin tells clients to watch “The Social Network,’’ a fictionalized film account of the legal battles among early claimants to big stakes in Facebook.

Photo: Richard Lewsohn | Image Souce | Getty Images