Funding Your RN Self-Employment Venture

By on Jul 3, 2013 in Nurse Entrepreneurs, RN Self-Employment

Pat BemisBusiness startup financing is a complex issue if you look at all the types of businesses in the U.S. However, most nurses start and operate a consultancy; a service or firm that offers some type of consulting service. The service may provide advice, opinions, information, or instruction. Legal nurse consulting is an example of a consultancy providing opinions. Another consultancy might provide on-site training (instruction) to hospitals, such as my certification review course.

Typical consultancy startup costs range from $6,000 to $8,000 for a home office depending on the complexity of the equipment needed. For example, an ACLS company would need more technical equipment than an education business not needing mannequins. Most businesses in the U.S. fail because of inadequate startup capital, inadequate cash flow, inadequate front-end planning, and an inexperienced management team—namely you.

After you determine the amount of money you need, the next step is to determine where you are going to get the money. Start by looking to yourself. Self-financing is the number one financing source for a small business venture.

Beware of the marketing hype offering you a grant, a bank loan, equity financing, angels and venture capitalists financing, and debt financing. Let’s look at these so-called options in more detail.


Grants would be ideal for small business startup because they do not have to be repaid. However, the requirements for a grant cannot be met by a consulting service or a staffing service. Grants generally support non-profit organizations, intermediary lending institutions, and state and local governments including schools and universities.

Bank Loans

Bank loans for starting small businesses are a myth. Federal laws require that banks protect their depositors’ money and not place it at risk. The failure rates in this country for small businesses are high—an unacceptable risk for depositors money. These bank loans advertised require personal collateral. Even when a loan is backed by personal collateral, banks seldom are interested in loaning less than $25,000. The Small Business Administration (SBA) does not provide business loans. They only back a percentage of the loan to make it more appealing to a bank.

 Equity Financing

In equity financing, you receive money in exchange for part ownership in your company. The investors are usually private investors (often relatives). The more money they invest, the more control they take. The question becomes how much are you willing to give up?

Angels and Venture Capitalists: Angels and venture capitalists are people or firms who provide startup funds for small businesses. Angels are usually professionals, such as physicians, accountants, attorneys, or insurance agents. The Angels Capital Electronic Network ( launched by the SBA connects the investor with the small business owner. Venture capitalists are part of large firms who expect large returns on large investments. More information on venture capitalists can be found at the National Venture Capital Association, (  Small service businesses and staffing services are of no interest to angles or venture capitalists.

Debt Financing

Debt financing comes in many forms; but, basically it is a lender who provides you with money that you have to repay plus interest. If your new business has no income (because at the beginning you have no customers) how can you repay the loan?  Not a good plan.

Personal Funds

This method of startup financing is by far the best for most nurses. Sources include:

  • Part of a retirement fund
  • Personal savings
  • Equity in a personal dwelling
  • Credit card. Beware of interest rates. They can be high. Plan to borrow only what you need, as you need it, and pay down to zero every month.

Nurses have a definite advantage over other business owners in the area of financing. They can work additional shifts before startup and save the money. They can also work shift work after the business is started. This shift work at night or on the weekend does not interfere with normal business hours.

This article was previously published by RN Magazine in my column Ask Pat.