7 Easy Ways to Raise Funds for Your Small Business.
Finances are key to starting and running a business smoothly. However, sourcing for funds can be challenging, especially if you don’t know where to go and how to go about it. You also want to be extra careful of where you source out funds from giving some of the conditions that follow. Despite all these difficulties you might face, there are several ways you can consider to raise funds for your small business. Find below 7 ways to raise funds for your small business.
Investing Personal Income
The first source of funds to consider is yourself. And you can do this by asking yourself some pertinent questions. What is your monthly income? What’s your personnel expenditure? What are your other sources of income? When you consider these factors, you’ll know how you can invest in your small business personally. You can plan how you’ll put aside a certain percentage of your income. In fact, you can have a separate account just for your business start-up funds.
The amount you separate should be higher than what you spend on other things. To ensure your commitment, you can have an accountability partner to keep you accountable or use a savings app. Also, try to keep your goal realistic so you don’t put yourself under undue pressure. This option has worked for a lot of small business owners and you could adopt it too when raising funds for your small business.
Reaching Out to Friends and Family
Approaching your friends and family for support should be the next option you consider in raising funds for your small business, especially if funding your own business personally is beyond your capability. Family and friends are naturally expected to be interested in your success and would be willing to support you. Approaching them shouldn’t be difficult and you can present your business idea more informally. If you can convince your family and friends, you can get loans from them or even donations. However, it is important that you would have proved yourself as a reliable and trustworthy person over time to expect anything from them. I mean, even if they are donating to your business, nobody will willingly give money to you when they know you will blow it or won’t be committed to achieving success.
This kind of fund is raised by partnering with bigger brands. The brands do not essentially have to be in the same business category as you are, however, it will be convenient. If you partner with bigger brands in your business category, you can offer a benefit to the larger business.
If the bigger brand agrees to partner with you, it would invest in your small business and cover your finances. The company would most likely want to acquire shares in your business to make returns on investments. For instance, if you’re a dispatch rider that partners with a delivery company, they could provide you with a bike to cover areas their current riders can’t. They could collect 20 on the profit you earn or more depending on your agreements.
Seek Angel Investors
As the name implies, these are investors that are interested in supporting small businesses. Angel investors are wealthy individuals with the financial capability to grow a business. What makes Angel investors different is that they are always on the lookout for small businesses like yours to invest in. For you to catch the interest and funding of an Angel Investor, you must have a convincing business pitch. Next, you should be prepared to give the angel investor some share of equity in your company. You can reach out to more than one angel investor if possible.
Participate in Contests
Large brands host competitions to fund start-ups and business ideas. Contests like these usually offer high capital rewards for winners. If you are confident in your business idea, you can apply to participate. Simply check trending hashtags on social media platforms like Twitter or even search for a popular brand name using a hashtag. You can also search the internet with keywords like talent hunt or business idea competition etc to search for such contests. Contests have helped various people start up their small businesses and even expand them. It is an opportunity you can use to source funds.
Apply for Loans
Loans from lending firms, banks or the government have helped many small businesses startup and run successfully. Each of these institutions has different conditions to grant you a loan. Most times, government loans have the easiest conditions due to the government’s prerogative to help businesses grow. For banks, the conditions depend on the bank involved. However, many banks prefer that your business is at least 1/2 years old before lending you money and they will most likely require that you have a year-plus account with the bank.
Although some banks do not require that you have an account with them before your loan request. But it is a popular requirement for most banks. You also need to provide the bank with a complete business plan with all products and services. Your business plan must reflect all information the bank needs, including long and short term goals. This way, they can be sure your business will be profitable enough to settle loan payments; interest included.
Lending firms, on the other hand, are non-bank firms that grant loans. Lending firms now grant loans online to small businesses seeking start-up funds. You can acquire loans from lending firms without as many conditions as those of banks. As long as you can meet the requirements of banks and lending firms, getting loans wouldn’t be impossible.
Setting Up a Crowdfunding
A great alternative to raise funds for your small business is Crowdfunding. Through crowdfunding websites, you can reach out to people from anywhere in the world to fund your business. There are several crowdfunding websites available and each one suits specific needs. On crowdfunding websites, you pitch your business ideas to the internet and ask for funds to start up. Considering that your business is in its infancy, you need to put maximum effort into convincing potential investors. A properly detailed business plan would guarantee investors and funnel funds into your crowdfunding account. You can run multiple campaigns to gather funds from investors, use previously successful campaigns to push your current campaigns for a higher success rate.
To conclude, remember to review your business idea from time to time to ensure it’s full-proof. This will make convincing external financial sources easier. Was our list helpful? Tell us what you think in the comment below.