Sooner or later, you will need to raise capital for your business. Whether you do it in order to actually launch a startup or you just want to improve business operations, unless you want your business to stagnate, capital is required for growth. As you probably know, your finances are the blood system of your business. Therefore, having an initial capital before you are interested in creating your own business or to decide to raise capital later down the road.
Unfortunately, this is a process that can easily go wrong, and you can take a flourishing business that is primed for growth and end up taking it in the opposite direction – out of existence! At the same time, this is also a necessary step. With risk comes reward, as the saying goes. Many business owners do not even know what is available to help them and what is not. What is a calculated risk and what is pure madness? Therefore, you need to make sure that you have calculated every step before you decided to make it.
There are countless success stories, like Shift. Online; examples that show it is possible to grow a business in a smart way and get the finances you need to do it. Thankfully, you can be sure that you can use some of the tips we are going to provide you with, and you can raise the capital after some amount of time. So, in order to help you out, here are some very easy ways to raise the capital your business needs and take it to the next step in its evolution:
In the event that there is not a need to raise a lot of capital, bootstrapping stands out as the easiest possible way to finance a business. It is so simple to get a low-interest business credit card these days so you can borrow cash whenever you needed it, all without paying interest for a specific period of time. What’s not to like? This can be a pretty good chance you can take in order to raise as much the capital as you might need. It should be said that this is not going to be easy.
At the same time, if you have money set aside, it can be used to finance the business. However, it is important to understand than in this case, the money becomes the business’ money and you might have problems with your personal finances. As always, do your own research! Or, you can actually hire some professional who can take care of your books, and then make it possible for you to start bootstrapping. This is an absolute must. If you don’t have the necessary experience, hire someone.
Countless huge crowdfunding success stories can be mentioned. If you have an idea or a business plan that gains the attention of people, you can end up receiving a lot of money from people that also trust in your company and believe in its vision. Just as a simple example, a 3D printer company, Formlabs, launched a crowdfunding campaign and eventually got covered by venture capitalists for $19 million.
Now, that may be way more money than you need to take your business forward, or maybe it’s not enough – the point is, with crowdfunding, you can connect with people that you cannot possibly reach otherwise. Product interest can easily be gauged and you can raise the money you need to fund the business, whether that’s more or less than in the example of Formlabs.
Since we are talking about raising capital for a business, we cannot do this without mentioning loans. As a simple statistic, around 3 quarters of all financing used for new companies comes from credit cards, lines of credit, and business loans. Even though we can see that this is not a popular way of raising capital, it can be said that this is one of the easiest ones you can use, you can be sure of that.
The most interesting option to consider is the SBA loan because it is designed to offer the best possible terms and rates for the smaller businesses. However, there are many other options that can be considered. Analyze the deals available from lenders since these are changing all the time, and see if it is possible to get what you need for your business.
The angel investor can be described as being an accredited individual that has a net worth that is higher than $1 million or has an annual income that is higher than $200,000. Usually, these people operate alone. However, it is also possible to see groups of angel investors that unite and operate as a fund.
The problem is that you have to get the attention of angel investors. This is only possible if a very good business plan is presented and the pitch convinces them to finance the business. Such a combination is not at all easy to do for some businesses. But it’s worth trying it out.
So, there you have it. Four potential avenues to get the funding you need for your business, whether that’s to launch a startup or take an existing business forward in its continued growth. All come with their own risks and rewards. Each one has its own list of positives and negatives. What sets one apart from another will depend on your business. It depends on whether the funding is for a startup or an existing business. It will depend on your personal financial situation as a business owner and the capital that already exists in the business cashflow. It also depends on your tolerance to risk.
Yes, a lot of equations to solve. Only you as a business owner can make the final decision, as each person and each business will differ greatly from one to the next. There will perhaps be other options available to you, other than the ones mentioned here. So, as always, do your own research before making any final decisions!