5 Options for Funding
One of the biggest questions you’ll face when starting up your own business is “Where and how can I raise capital”? After all, if you don’t have funding, you’re not going to get very far.
Luckily, there are several ways you can raise capital but before you start asking other people, ask yourself first. After all, if you’re not willing to invest in yourself, how can you expect anyone else to do the same? It’s very much the norm for successful entrepreneurs to put their own money into their small businesses to get them off the ground. Doing so also puts you on the radar of potential investors because it demonstrates your commitment to the project.
This is great if you actual have the capital...but what if you don’t have anything to invest?
First things first. Don’t launch if you don’t have something to offer. That first round of funding is usually the most difficult to get so you want be prepared and show that you’re serious. Create a detailed plan of action before you start approaching funders and raising capital.
Here are some of the best ways to raise capital, options for funding, and how to make your most appealing pitch.
1. Yourself
Just to reiterate the point from before: your investment starts with you. Very rarely is there a startup where the founder hasn’t invested some of his or her own money. The amount that you put towards your business is wholly dependent on a range of details and circumstances, and it doesn’t even have to be a huge sum. But you should be willing to put as much as possible towards your startup, and consider it an investment.
2. Family and friends
People tend to squirm at this one because it’s always awkward to ask friends and family for money but this is actually a great option for entrepreneurs. What makes the difference between sounding like you’re asking for a favor or putting friends in an awkward position is how you present your pitch. Keep it strictly professional and make sure you approach them as investors first, friends and family second. Sure, you might get turned down, but by keeping it all business, it will smooth things over. On the bright side, you might be surprised to find out who has extra cash that they’re willing to invest in you.
3. Banks and traditional lenders
Did you know that traditional lenders like banks often have great small business loans with surprisingly great terms and interest rates? A solid credit profile and the type of collateral you can offer will affect this, but it is one of those tried-and-tested avenues for getting some much-needed capital. This is also why it’s absolutely necessary that you have a well-thought-out business plan - you’ll need to show them why you need the money and how it’s going to be spent. Should you be able to secure a loan, it will not only help your credit score but will also show other investors that you’re a legitimate company and not just some “fly by night” business.
4. Crowdfunding
This untraditional form of getting funding has been rising in popularity over the years. On the off chance that you don’t quality for a small business loan, it could be a great option for you. With so many crowdfunding platforms available, you will definitely need to do your research to see which one suits your needs. Whichever one you choose, just make sure that it’s a reputable company with a solid success rate and go over the terms and conditions with an eagle eye.
5. Investment companies and angel investors
These are the guys any startup would be lucky to have but that also makes them one of the most difficult to secure. You’ll find that some investment companies have very rigid pitching procedures while others just seem to magically appear at the right time and place. If you want to pique the interest of these lucrative investors, it’s all about smart, effective PR and marketing. You might be exactly what they’re looking for, but they’re not going to know that if you’re not visible enough to be on their radar.
