Interested in learning how to start an export business, but not sure how finance it? The following are 5 of the most common ways to finance and start your export business!
Bootstrapping
The most common source of financing for most exporters is bootstrapping. Many small business exporters start with their own savings, investments, or retirement accounts. Another common resource of start-up money is a loan against assets. Remortgaging your home, taking out a second mortgage, and even credit cards are all easy places to find funds. If your export business is established and can demonstrate a profit, you may also be eligible for a line of credit at a financial institution, especially one which caters to the export sector or small businesses.
If you know you’re going to start a business, planning to self-finance (as much as possible) may be the best way to go.
Part-Time
In the vein of self-financing, also consider keeping your regular job and engaging in your export business on a part-time basis. While it may be a hassle working odd hours and you may be frustrated with slower growth, the benefits often outweigh the costs. If you’re new to the business, this is a great time to learn the ins and outs. It also allows you the financial security of a steady income and keeps you out of deeper debt as you self-finance your start-up.Friends and Family
The people closest to you are also the people most likely to believe your venture will succeed. Explore the possibility of asking your friends and family for a loan. You may even want to present it as an investment with a potential return. While you probably won’t raise all of your capital from a single person, five or ten people each willing to risk a small amount of money can quickly add up to what you need to launch your company.
Investors
Without some kind of collateral, a bank probably won’t extend your business any credit line. Instead of looking for institutional financing, consider outside individuals willing to risk their capital in exchange for a good return on investment. Your city or region probably has a group of investors who can be approached and presented with your opportunity. Be prepared to demonstrate your experience, your market, your product, your process, and your financials.
Government Assistance
The U.S. government highly encourages exports and has special programs available for U.S. companies which engage in some type of export. Contact the U.S. Trade Information Center as well as your local Small Business Administration representative for more information on financial assistance available for your business.
You’ll probably end up utilizing a mix of these financing options. Just keep in mind that the more successful you are, the easier it will be to finance your operations moving forward. Keep good inventory and financial records, and make sure you maintain great relationships - you never know who may be looking for an investment opportunity!