HOW DO YOU RAISE FINANCE FOR YOUR BUSINESS?
It's the question every business owner wants an answerto. "How can I raise the needed capital to get my business where I need it o be?"
We all have dreams and aspirations for our businesses but for some people, that idea can't be brought to life because of the lack offunding. For those lucky enough to start with the little they have, they soonrealize that they've gotten more than they bargained for: debts, emergencies,miscellaneous, and expenses you never planned for. In this kind of solution,one is left with two options: to declare bankruptcy, close shop and thus, endyour dream, or seek funding. But where?
The answer to this question will be provided shortlyand by the time you finish reading this article, you will know about how toraise finance for your business. So, shall we?
You might have probably heard this before, in fact,I'm sure you have and you would do it too, except you have no idea how it worksor even how to go about. The truth is, it's super easy! The internet has madeeverything easier and today, you can crowdfund on the internet using websitesthat exist for the only purpose: help people and businesses get the financethey need for their businesses. Below, I've compiled a list of the best. Youshould check them and use one of them to raise finance for your business:
-Kickstarter.com: It is one of the most popular crowdfunding sites. A lot ofpeople have made their dreams come true by using this platform.
- Gofundme.com:GoFundMe is another crowdfunding platform known for helping bring creativeprojects to life.
Other crowdfunding platforms you can make use of areUlule, Gogetfunding, Wefunder, Crowdfunder UK. You should try out all of theseoptions. They're worth trying out.
2. Apply for a loan
Have you thought about this yet? It's the next easiestway of getting finance for your business.
In a study by Small Business Administration (SBA), itwas found out that "75% of financing for new firms comes from business loans,credit cards, and lines of credit." This means, even though technology iscreating new methods of raising capital, most small businesses still seek loansas the primary way to fund their operations. You should get one too!
However, to get your loan approved by banks and otherfinancial institutions, you have to meet a couple of requirements such as:
- You have to have been in business for 2 years or more.
- Yourbusiness pulls in strong annual revenues.
- Good creditscore.
- Have yourrecord ready: profit and loss statement, tax returns, bank statements, etc.
NOTE, these conditions might differ depending on the institution you're lending from. And if you don'tqualify, there are other types of funding you can go after, like equipmentfinancing, invoice financing, etc.
Also, if your business doesn't meet the requirements,getting a loan — as you can see — might not be the option for you, you can insteadgo the crowdfunding way or choose the other options below.
3. Askfriends and family
This is a bit like crowdfunding, except, in this case,you know the people you're seeking help from. Raising capital through friendsand family for one's business remains one of the most viable options. Who elseis better suited to invest in you and your dreams? The people who care aboutyou!
You have to be careful when picking out who to ask forhelp though. A content marketing specialist and SBA contributor by the name,Caron Beesley, suggest that you narrow down the list of friends and familyyou'd like to ask for help to just people who have faith that you will succeed,understand what your plans are, and are clear about the risks, as well as thosewith solid business skills.
This would help prevent any problems down the line.While you're at it, also make sure you've gotten a solid direction and businessplan. Trust me, you don't want to go to anyone with a half-baked idea.
Angel investors are a reliable source of capital foryour business. Typically, angel investors are people with a net worth of $1million or who receive an annual income of more than $200,000.
But like I said, you really should not approachanyone, angel investors and venture capitalists especially, with half-bakedideas. You should have a solid business plan and a great pitch ready. Pitching is all about capturing their attention with enough data about your goals, yourcompany's potential, coupled with the enthusiasm.
You only get one chance, do not blow it. Be prepared.To answer that budding question on your lips, you can find angel investorsusing Funding Post or you could also contact the Angel Capital Association. Itis an amazing platform to reach and meet with angel investors.
Venture capitalists are similar to angel investors,but not completely. Venture capitalists typically look to invest in"slightly more matured companies" and almost always, they want moresay in the managing of the day-to-day operations.
You can easily apply for an investment with a VC firmbut again, your pitch is crucial! To further assist you, Sequoia, one of themost successful VC firms in the world right now suggests that when pitching your business, you should:
- Explain what's changed. Detail the innovation, industry shift, or problem that presentsa substantial opportunity for your company.
- Explain what you do. In one sentence, show how your company can capitalize on thisopportunity.
- Explain thefacts. Get to your company's story and financials quickly. Layout theopportunity with numbers. Discuss the team and their abilities and experience.
Ready to go get your dreams? Use one of these sixmethods to raise finance for your business, and before you go, GOOD LUCK!