This is a contributor’s blogpost …
You may have a brilliant idea for your startup business, but to be successful, you need to have the money to make your ideas become reality. This is where many people get stuck. If you have limited financial resources, your hopes and dreams can be dashed before you get started. It may be that you get to begin your business, but if you don’t meet your profit margins, you will experience a loss and begin to experience a downturn. You will need money fast, but how? In this article, we will give you some ideas on how to raise capital for your business. Whether you are just starting out or have been operating for a while, here are some of the (legal) ways you can get your hands on money right when you need it.
Ask family and friends
These are the people who love and support you, so they may be your first port of call. You may have ‘rich’ family and friends who will give to you without condition, but chances are, they will expect you to return the money to them eventually. Be honest with them about what you need, and show them your business plan, so they know you have some idea of financial projections. You can offer them a share in your business or interest on the loan as incentive for lending to you. Whatever the case, don’t put them out of pocket, and return the money (if requested) as soon as possible.
Go to a bank or online lender
This is the common route for business owners, though you will often need a good credit score and a business plan to show them before they part with their cash. Make sure you shop around, too. You can run at a loss if you are hit with huge interest rates, so compare loan providers before you sign any paperwork. Services such as businesslineof.credit will help you find the best lenders for your needs, so take the time to look at the options available to you.
Speak to private investors
Professionals in the business world, private investors are keen to lend money to fledgling businesses in the hope of making a profitable return. Nobody wants to invest their money into something that is ‘high-risk’, so you do need to have a strong business plan in place to prove your worth. You should also practice your pitch, as you will need to convince investors that your business is worth investing in.
Think about crowdfunding
This has become increasingly popular in recent years, though it is usually a short-term solution to your financial needs. Using a site such as Kickstarter.com, set a goal for how much money you need to raise, and invite friends, family, customers, and the general public to pledge one-off donations to help you reach your target. These people won’t expect a return on their investment to your business, but they do need incentive to make a donation in the first place. Knowing that your business is eco-friendly or has some value to local communities are two of the ways to encourage people to part with their cash.
These are just some of the ways you can raise money for your business. If one route fails, try another one. Of course, you do need to put the work in to make your business a success, so only pursue funding when you have a decent business plan in place. You will lose credibility from all the sources mentioned if you waste the money given to you.