With hundreds of thousands of businesses opening each year, you have a lot of competition to consider. Yes, there are hundreds of business ideas that may not need a huge investment, but as a fact of the matter, you do need some money to make more money!
Even if you are short on money, it should not stop you from achieving your dreams, instead you need to focus on raising capital to meet the business startup costs as well as the investment required to grow your business to the next level!
Not knowing how to fund your business can set you back and keep your business from starting altogether. Continue reading this article, to know how to go about raising money for your business.
1- SBA (Small Business Administration)
As you’re looking at business funding, you’ll find there are different types, but some are more difficult to get than others. When you work with the SBA, it can be easier to get a loan since the government has a vested interest in the well being of businesses.
The SBA has multiple options to cater the needs of different type of businesses. But most importantly, they help and guide you through the process of finding the right loan, which is why applying for the SBA funding should be your top priority.
If you aren’t likely to qualify for a traditional loan, then
microloans might be the best option for you. Microloans are put together for
businesses and individuals that need some extra help, but can’t qualify at a
Microloans are popular in small and developing countries,
but this still can be an option for you in the U.S.
3- Personal Financing
Do you have good credit and believe in your idea? Depending
on how good your credit is and if you have collateral to put up against the
loan, you may be able to get personal financing.
You may also have chances of funding your business without an impressive credit score, but if you do decide to take out a personal loan, you should know that this is a risky situation. That risk factor is why many would-be business owners aren’t able to get a loan.
4- Savings Account
If you have a savings account, and there is no other way to
get the money you need to fund your business, it might be time to tap into your
savings account. Spending your savings means you won’t have a safety net if
things go wrong, but if you see the vision, you might choose to invest in your
Crowdfunding is becoming a common way to raise money for a new business. One of the most popular crowdfunding sites you’ve probably heard of is Kickstarter. Companies have raised millions of dollars through Kickstarter campaigns, and more companies continue to use this platform.
If Kickstarter isn’t the right option for you, there are
other sites that can help depending on your needs. Some of these sites cater to
one type of business, such as non-profits, while other sites cater to small
6- Vendor Financing
Negotiating terms with your vendor may give you more time to
hold onto your cash until you start turning a profit. Most vendors give you 30
days to pay your invoice before charging fees, but if you talk to them, you may
be able to get a longer-term.
If you have a sales cycle that is longer than 30 days, it
can be difficult to pay your vendors in that time period. Explaining your sales
cycle to your vendors may help you drive your case home and get the help you
7- Loans from Family and Friends
Family and friends believe in us and our ideas more than
strangers in many cases. If they believe in the idea as much as you do, you may
find they are more than happy to open their checkbooks.
If you aren’t sure about taking money from friends and
family, the best thing to do is to write out clear contracts, so everyone knows
what is going to happen.
8- Pre-sales of Products
Did you know that you can sell your products before you even
make them? Pre-selling products is a great way to see how many people want your
product and to get the money you need to make them.
Manufacturing products can be pricey, but if you have the
money from purchases before you have to make the product, it will take the
stress off your wallet. Not only will pre-sales help you get some cash upfront,
but it keeps you from paying for warehouses you would need to store all the
products you made but didn’t sell yet.
You can pre-sell products online or talk to people person to
person to let them know about your venture. People are excited to be the first
to have a product, and you can offer special additions for the early
9- Venture Capitalists
Venture capitalists or VCs want to invest their money in
young companies that have a potential for growth. When you work with a VC, they
usually want to have a share of the equity in exchange for their investment
VCs not only help with the money part of things, but they
often help run the business to protect their investment. The bigger the stake
they have in the business, the more involvement they usually have in the
company. Make sure to choose VCs you’ll actually want to work with, or it could
become a nightmare situation.
Raising Capital for Business in a Nut Shell
I am sure, now you know enough about raising capital for business startup costs that you can get started with confidence. When you know how to get the money you need for your business, you can start to grow your business better!