How To Raise Funds As A Small Business.
By Ayandola Ayanleke
How do I raise funds as a small business owner? This is probably one of the questions on your mind if you are a small business owner just starting out, or trying to sustain your business. It is not farfetched to say funding is one of the most important factors in running a successful business. And while large companies have different ways to raise funds, it is usually not as easy for small businesses. This article will help you learn different ways to raise funds as a small business.
If you have a good business idea or you have started a business that you know people will want to be a part of, you can decide to try crowdfunding. The beauty of crowdfunding is that you have the opportunity to meet likeminded people who can also give you ideas that will improve on the initial idea you had for the business. You can also come across investors who might just take a special interest in your business and be ready to invest. You can hardly ever go wrong with crowdfunding, even if you don’t get the funds you need, you are likely to get inspiration that would help your business, and who knows, you might also be one of the success stories out there.
Angel investors are individuals with a high net worth that are interested in investing in small businesses. Many business owners fall into the trap of wanting to do it alone because they want to be the only one calling the shots, but most successful businesses survive through partnership. So, if you want to scale, you might want to consider bringing in investors. To attract angel investors, you have to have a comprehensive business plan that contains what your business is about and your business projection as well as what will be done to realise the projection. All your plans for the business need to be clearly stated to assure the investors that you know what you are talking about. So, it goes without saying that you must have done proper and extensive research before writing your business plan.
If you don’t believe in yourself enough to put personal funds into your business, why should anybody believe in you? In fact, you are likely to get people to put their funds into your business when you have shown the work that you have done on your own. You shouldn’t start a business without any basic plan in the first place and that basic plan should include your own money.
Friends And Family
Raising funds from your family and friends is a viable way to raise funds as a small business owner because they are probably the group of people who by default, believe in you besides or even more than yourself. You might not get them to invest in you if you have not, hitherto, proven to be a trustworthy and hardworking person, so that’s something to consider. But if you have, you should reach out and you might be surprised that you would get all you need from your inner circle.
Small business owners are usually sceptical to apply for loans, and as they should, because of the conditions usually attached to securing loans. Fortunately, many banks and microfinance banks have provisions for small businesses seeking to secure loans. If your business is capital intensive, securing loans might be a good way to fund your business. However, I usually recommend that loans be the last resort if you have tried other means to no avail.