When you start a new business, you need money to get it off the ground. You need the money to rent or purchase space for the business, furniture and equipment, supplies, etc. You also need money to pay employees. There are several places where you can get the money that a new business needs:
- Personal savings -- you can fund the business yourself from savings or by getting a second mortgage on your home.
- Bootstrapping -- In some simple businesses, you can bootstrap the business. That means that, with a very small investment, you get the business going and then use the profits from each sale to grow the business. This approach works well in the service industry where start-up expenses are sometimes low and you don't need employees initially.
- Bank loan -- You can borrow money from a bank.
All three of these techniques have limitations unless you are already a wealthy individual. A fourth way to get money to start a business is called Venture Capital -- with venture capital you can sometimes obtain large quantities of money, and this money can help businesses with big start-up expenses or businesses that want to grow very quickly.