3 Ways to Finance a New Central Florida Business

Seminole County business insurance

In a recent post we discussed the bounty of new business opportunities emerging in Seminole County, but starting a new business can be a costly and time consuming adventure. While the cost of building a business from the ground up varies widely depending on the business model and chosen industry, experts estimate that the average cost of starting a small firm in the United States is over $30,000 and rising. According to the U.S. Small Business Administration (SBA) a micro-businesses can get started for as little as $3,000 or less if the operation is a home-based sole proprietorships with low upfront investments, but these operations are often limited to service providers or professional consultants. When it comes to opening a storefront or hospitality sector operation the investment and start up capital needs greatly increase.

As such, a common question from many prospective Central Florida business owners is, how can the new operation be financed?

According to Consumer Reports, roughly 68 percent of start-up financing comes directly from the pocket of the business owner. In many cases entrepreneurial hopefuls will leverage their liquid assets, leverage their property assets or retirement plans, but these tactics can be extremely risky especially should the business struggle or fail. Instead, there are many other, more secure ways, to finance a new business. Here are a few options:

  • Bank Loans- Entrepreneurs can acquire a Small Business Loan of up to $750,000 from your local lender, backed by a partial guarantee from the SBA. By backing these loans the SBA makes it less risky for a local lender to provide small business owners with the financing they need.
  • Private Investors- Private investors, often referred to as “angel investor” or an informal investor, is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. These investors will often offer up start-up capital in exchange for a share in business ownership.
  • Venture Capital- Venture Capital firms will invest money into a budding business with the anticipation of a rapid return. In most cases, these lenders expect their investments will liquidate in 3 to 7 years as the firm either becomes publicly traded on the stock market or is acquired by another company, and the invested funds will be repaid to the firm.

Beginning a new business can be exciting, however new business opportunities also come with increased risk exposures. Whether you are current Central Florida business owner looking to grow your operation, or an entrepreneur looking to start a new venture, the right risk management strategy and Seminole County business insurance portfolio is vital. At Newman Crane we understand the hard work and dedication it takes to build a business, and the severity of losing those hard earned assets in a lawsuit. That’s why we are committed to providing quality and affordable insurance in Central Florida. For more information about us and the specialty industries we serve, contact us at (407) 859-3691.