Small businesses can suffer from a variety of problems. Before you start a business it is imperative that you know the risks you face, especially in this uncertain economy. The main thing that happens is bankruptcy. This occurs because a small business does not have enough capital to continue running. Luckily there are things you can do to combat this. We will look at those in a moment. A small business typically means you make less than $100,000 in a year to begin with and that means you need at least $250,000 in capital due to the start up costs being around $150,000 for a regular business.

The online world has made this somewhat easier for business owners. With an online business you need little capital to begin especially with those who are offering services instead of products. If you sell products you may be able to get them from a distributor without first buying a thing. For example, a drop shipper is a company that is willing to send the products you have sold through your site without actually sending them to your home. You get to pay the company for what you have sold rather than what you have in inventory.

Depending on the type of business you may find you are also dealing with taxes, insurance and high energy costs. Those in a brick and mortar location need more capital because there are more expenses. You do not want to start a business without having enough to cover the rising costs. Even if you break even during the first year, the next year may take more of a toll on your capital.

There is one other caution before we get to funding your business. Experts in a certain service or industry often think they can run a business, but find out later they just do not have the business savvy. What this means is that they may be able to perform in their current job, but they are unable to deal with the actual running of a business. Running a business and being an employee are two different things. For example, in the running of a business you focus less on what you are an expert in unless you are the only employee. If you have other employees they do the work, while you ensure there is capital, a budget and financial accounting. You are also the one that will find the funding required in your business.

The first place to start looking is at bank loans. Bank loans are heavily regulated, which provides a safe option for you to get funding without killer interest rates. You have unsecured and secured loans to take advantage of in this area. Secured loans will be the best as long as you have capital.

In starting a business getting funding from merchant cash advance companies is not possible. They require at least six months of credit card sales before they are willing to lend you money. This shows them the potential your business has to make sales. They also look at the amount of credit card sales you have. The less you make in credit card sales the less they are willing to loan you.

However, merchant cash advances can be helpful to you in the future. When you are ready to expand your company they can be there to help. Furthermore, if you have hit a rocky time in your company due to the economy you may be able to get the funding to survive. Once through that difficult time you can go back to running the company like normal.