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Types of Funding for Startups | 401K Options and MORE - YouTube
Channel: The Freedom Strategy
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- Don't you just hate it
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when you come up with
those totally awesome idea
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for a great small business
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and then you realize well
(bleep) I don't have the money
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to do that.
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Well you have definitely
found the right place
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because today I'm gonna talk about a bunch
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of different ways
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to help you fund your
small business start-up.
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And if that's what you're
doing starting a small business
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then you definitely
found the right channel.
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So go ahead and subscribe
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and hit that notification bell
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because I come out with
new videos every Wednesday
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and that way you will be notified
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when I have new videos out
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on small business start-ups.
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And do keep watching
because at the end I'm going
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to tell you about a free download
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that I wish I had
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when I started my first
small business start-up.
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(upbeat music)
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Welcome to my channel my name is Heather
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and I am here to help you get
your small business start-up
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from an idea to reality.
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And I've done it a
number of times not only
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for myself but for other people as well.
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And one of the biggest
issues run into is money.
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I mean yeah it's true you
can start up a business
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with, well I was gonna
say zero dollars I'm
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not entirely sure that's true.
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You'll find videos that say you can
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but yeah no.
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It takes some money to
start a small business.
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Now it depends on what you're gonna do.
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Sometimes it takes a little bit of capital
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and sometimes it takes a lot of capital.
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And let's go over some of the ways
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that you can get capital
for your start up business.
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Probably the easiest place to get money
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for your start up business
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is your own personal savings.
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Now I get it you probably
wouldn't have even clicked
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on this video if you already had the money
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to start your small business
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but it is one place that a
lot of people start with.
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And maybe that's only 10%
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of the money they're gonna use
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for their business
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but it is a good place to start.
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Now let me be clear I am not telling you
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to drain all of your savings.
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It is really important
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to have enough of your own money
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in the bank while you're going through
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the start-up process
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to cover your living expenses
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or any kind of emergencies.
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But if you have some excess savings
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then that's a great place to reach
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to get some of the start-up money
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for your start-up business.
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Now another place people turn
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to get some capital to
start their new business
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and I'm not gonna tell
you that I recommend this
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but I will tell you is
that there are a lot
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of people who have done it
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and have grown their businesses
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to hugely successful multi-million
dollar organizations.
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So you need to evaluate wether this option
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is right for you and that is credit card.
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Now credit card debt is a very expensive
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to carry and it's very difficult
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to pay off over time.
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But a lot people use it
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when they have a business
that they're starting
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and they know I don't know how they know
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but they know that within the
first three or four months
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they're gonna be able
to make a big huge sale
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and turn around and pay
off that credit card debt.
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So if your business
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or the potential business
you're starting up
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if you think that's gonna happen to you
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then maybe a credit card is the way to go.
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(inhales)
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Let me know how that goes for you
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because I do know some
people doing successfully
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but that's a tough one.
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I've never done that so
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if you've done it put a comment below
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and let me know.
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A little less painful
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than going the credit card route
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is you can always ask family members
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to either straight up give you a gift
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or invest in your business.
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Now that be challenging
for a number of reasons.
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Really depends on your family
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it depends on their
finances for themselves,
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it depends on how much faith
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they have in your idea,
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and it also depends on
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what happens if things go bad?
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Is thanksgiving going
to be canceled next year
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because things went bad?
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I will give this piece of advice
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if you are going to get a loan
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or some sort of investment
from family members,
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please write out the details make
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it super clear and make sure everybody
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on both sides of the equation
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is on the same page.
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That way no matter what
happens going forward
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at least everybody will
know what to expect.
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All right so I got to know
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how many of you out there
have actually already gone
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to family members or intend to go
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to family members as a source
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of funding for your new start of business.
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Put that in the comments below.
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All right so the next
way to get some funding
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for your start-up business
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is something that's been
around for a long time.
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It used to be considered one
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of the safest way to get money
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for your business but now not so much.
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And I'm talking about a home equity loan.
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So back in the days before the crash
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of 2009, 2010, people used to pull money
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out of their homes all the time
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the equity out of their homes
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to start businesses to do all kinds
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of different things.
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And honestly it worked great
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because home values just kept going up
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and up and no problem you sell your house,
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you pay of all your debt, piece of cake.
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The problem is since the crash
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of the housing market and maybe some
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of you are too young to remember that
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but I am certainly not.
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It's pretty tough to bank
on quite literally bank
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on the value of your home.
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You can be at an area
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where it's still going up and up
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maybe all of you California people are
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in that position.
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But there are other areas even pockets
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within those areas where the values
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can go up, they go down,
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and you really can't bank on your house.
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Continuing to increase in value
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at least for next five years or so.
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So please do your market research
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on your own home, your own neighborhood
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the area and see what the
potential consequences are
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if your home value stays stagnant.
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You might find yourself
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in an upside down situation
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in your home and you do not want
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to put yourself in that position.
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Okay now we're gonna move on to something
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that's a little bit more creative
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and yes a little bit controversial
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maybe even a lot controversial.
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So I am talking about a ROBS account
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and that stands for a rollover
business start-up account.
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This is where you tap into your 401K, IRA,
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if your a teacher your 403B?
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I'm pretty sure that's the
teacher retirement fund.
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And you tap into that
and you use that money
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to start-up your business.
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Yes it's legal, yes it's IRS approved,
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It is a little bit complicated.
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So you really do have to
have some professional help
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to walk you through the process
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but you are actually able
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to use that money not pay a penalty,
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there is no early withdraw,
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it's your not doing an
early withdraw you're using
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that money to start a business.
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You're business will have to be a C corp
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and there is some details involved in that
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but you can actually be an employee
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of the business and get paid a salary
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in fact you should pay yourself a salary
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if you're running your own business.
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And the income you make
from paying yourself
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a salary that is taxable
but the money you tap
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into form your retirement
account you are not going
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to be taxed on or you're
not going to be paying
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a penalty until down the road
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when you actually take that money out
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of the whole entire
retirement account structure.
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So it is definitely something to consider.
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There are definitely a lot
of people who would say
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that's foolish to tap into
your retirement account.
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I'm not of that opinion.
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I think if you've got
a great business plan,
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you're structured, you've
done your research,
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and you believe in
yourself and your business
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I personally believe there's
nothing wrong with it.
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You just have to understand
this is retirement money
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that you are using.
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So keep an open mind with
that I did this video up here
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on the ROBS account
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it gives you a little
bit more information.
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So please check that out if that is avenue
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that you want to pursue.
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I definitely know it's not for everyone
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but it really was a great option for us.
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We have done this and it's
worked out great for us.
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And the last way I'm gonna
talk about how to get funding
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for your new start-up
business today there are lots
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of other ways too I will
do future videos on that.
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But today I wanna talk
about is crowd funding.
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Now obviously this is something
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that really wasn't around at least not
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in a formalized structured
way 20 years ago
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when I started creating my own businesses.
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But it is something
that's a great resource
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for people in today's world.
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Now crowd funding is where you
put out your business idea,
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you maybe create a little video
about what you're planning,
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and you try to get others
to really donate money
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to starting up your business.
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Now currently the top
crowd funding websites
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are https://www.gofundme.com/
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and https://www.kickstarter.com/.
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I have friends and family
members and clients who have done
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both of those and actually
had some pretty good success.
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Now what I have noticed is where
those people are successful
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with the crowd funding
those are actually people
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who have very strong pretty
large social media networks.
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So if you've got a lot of Facebook friends
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and followers or you're huge on instagram.
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It drives a lot of revenue
to your start up business.
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You will have to put together a video
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and some information for
the people investing in it.
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And they will decide do
they think that you're
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gonna follow through with the business
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and they're happy to support you?
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Or are they kinda looking at
it like this could be a scam.
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But if you have a large
social media network
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that is a great place to start.
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It's free
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and who knows you might actually
get serval thousand dollars
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maybe even more for
your start-up business.
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Okay so now that you know some ways
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to fund your small business start-up,
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I wanna talk about this
download that I have
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for you it is the top
10 critical questions
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that you really should
evaluate, think about,
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and answer before you
even start your business.
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The link to that is below.
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It's got all kinds of questions
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and frankly one of them is one
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that I wish I had known
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when I started one of my businesses
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because it probably would have saved me
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about $100,000.
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Yeah that was not my best moment.
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But these are questions
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that really will help you determine
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are you ready to do your own business?
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Is your own business a good idea?
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The link to it's below, it's free
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it's a PDF just download
it and fill it out
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on your own time.
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And if you are sitting
there thinking about
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starting your own business I would love
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to hear what your ideas are
without giving too much away.
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Don't worry I'm not gonna steal them
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but go ahead and put in the comments below
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what business idea you are
thinking about starting.
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And if this video has helped you think
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about some new ways for funding
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or maybe even giving you a little push
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to kinda try to secure that funding,
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please go ahead and give it a thumbs up
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and subscribe so you can see
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future videos all about
starting up your small business.
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Thank you for watching
The Freedom Strategy
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my name is Heather
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and I love helping people
start up new businesses.
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I will see you next time.
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