Every year, more businesses enter the market. Getting funding to help grow your business is a major challenge for founders.
Maybe you’ve thought about pitching investors to raise money for your small business. Here are some clever ways to raise capital.
Tip: Create a website before you start looking for funding. This will make your business look more professional and solid to potential investors.
9 ways to raise money for your business:
- Bootstrap
- Talk with a friend
- Get a loan
- Request a Grant
- Crowdfund
- Offer product pre-sales
- Get involved in angel investors
- Pitching to venture capitalists
- Research relevant incubators
1. Bootstrap
You should determine how much money you have available before you start a business. You can also use the money you have saved to finance your venture.
This will give your confidence and drive you to succeed.
There are many ways to reduce costs for your business.
- Reduce your expenses. Use your home as a workspace. These small business accounting tips can help you keep track of your finances.
- The smallest possible number of employees should be employed. It is important to reduce or eliminate extra resources during these times. In times of emergency or for things you simply aren’t able to do yourself, you can hire contractors/freelancers and interns.
- Sell your assets.
- Apply for a credit loan.
2. Get a friend to be your companion
It is possible to trust people you know well. If the circumstances are right, you may be able to take your time repaying them.
But it’s just like other types of investing. It’s not the best way for business and pleasure.
3. Get a loan
Although investors are often talking about funding startups, loans are still an important option to raise funds for small businesses.
- A bank loan. If your credit is good, and you are responsible, they will approve.
- SBA loan. Also known as small business loans. This is the most popular type for loans to new businesses. The interest rates are usually between 7% and 8.8%.
- These loans are available to start-ups that have less capital than other options. They can be as low as $500 and as high as $50,000. They can also have zero interest rates.
4. Request a grant
This makes fundraising attractive because you don’t have to pay anyone back. Stop worrying about unpaid interest payments and debts. Both the government and the private sector have options.
Grants are very competitive. You can apply for multiple grants after your company has been registered.
Search the SBA Grants Program to find a department that is specialized in your industry. You might search for grants from USDA if your company is an organic farm share business.
5. Crowdfunding
This method allows you to have more control over raising funds. Crowdfunding is where small amounts of money are raised from large groups of people via the Internet.
This method is unique from others. This method is different from other ones.
6. Offer product pre-sales
This option is for companies that launch a product. Customers can pay ahead to help with production costs. Your customers will hold you accountable.
Be realistic in your decision-making process. Communicate with your customers.
7. Try out angel investors
Angel investors can offer large amounts of capital to startups and entrepreneurs.
Connect with your angel investors and entrepreneurs. Attend local events. Search for online networks such as AngelList.
8. Pitching Venture Capitalists
Venture capitalists, or ‘VCs’, are the opposite of angel investors. They focus on the individual entrepreneur and help them run their startup in its early stages. Venture capitalists care more about profits. This includes whether the startup can file for an IPO (initial public offering), or make a large amount of money quickly.
If you are looking for funding from a VC, it is not easy to show your ability to succeed. You only have a limited time to convince the VC your business is viable.
There are many venture capitalist firms to choose from. It is up to you to research the right one for you.
9. Find relevant incubators
An incubator is not just a place to invest. The incubator provides everything you need: office space, mentoring, marketing support, and equipment. This allows you to focus on bringing your idea to market.
Be aware that the application process can be lengthy and complicated. Think about your goals before you commit to this endeavor.
The International Business Innovation Association offers the largest network of support for entrepreneurs around the world. Contact your local economic development agency to find out if they can assist you.
