So, you just got this incredible business idea, and you are not sure how to get funds to get your big idea off the ground.
Finance has always been a challenge for many businesses — and small businesses are often at the receiving end. A 2016 survey report showed that at least 73% of small businesses needed some financing to get on their feet.
Having mentioned that, you will agree that getting finance for business is no walk in the park or child’s play. Accessing funds to kick start a business can be daunting, but if you are equipped with the knowledge of how to source funds, you will know where to look and how to go about it.
How can you raise money for your small business?
From tapping into your savings, taking bank loans and crowdfunding, corporate programs, venture capital, and angel investors, there is quite a long list of options you can explore when looking for loans for your small business.
Let’s take a look at some viable sources of financing for your business. Shall we?
1. Personal savings or Bootstrapping
If you believe in your business and you are certain of its potential, you shouldn’t mind putting your money in it — not all of it, but part of your savings will do. Bootstrapping involves reeling in any personal funds that are at your disposal — your savings, credit cards, and home equities (If you have one) are a great place to start.
Kickstarting your business with personal funds is much easier and saves you the burden of loans and monthly payments.
Bootstrapping or financing your business also makes lenders and investors come knocking for possible partnerships because it shows that you have a vision and are confident about what you are doing.
2. You can apply for a loan
A recent survey by the Small Business administration shows that 75% of startups get their finance from loans and other similar sources of funds.
To get loans for your business, different lenders have different criteria you must meet. Sometimes, these include having a good credit score and evidence that you can repay the loans.
While you are at it, it is always best to understand what you are getting into and not be in a rush to sign any deal that’s put in front of you.
Have your profit and loss statement handy. Your balance sheets, bank statements, and tax returns shouldn’t be far off as well. Having these documents available will help speed up the application process, and you can get the loan in good time.
3. Try crowdfunding campaigns
While launching a crowdfunding campaign may not immediately cross your mind as a source of finance for your small businesses, that option is very much open and available.
There are a lot of testimonies about businesses that getting funds from crowdfunding campaigns. All you have to do is have the right products/services and craft the right pitch.
One good thing about crowdfunding is that it allows you to meet and connect people who share the same interest as you. That way, you will be getting feedback on how to improve your products from like-minded people, and most importantly, you will be getting money or capital for your business.
How to launch a successful crowdfunding campaign?
To launch a successful crowdfunding campaign and get people to buy into your idea, you must have a convincing story. One that is relatable and compelling enough to make people reach into their pockets to support your business.
If you can deliver that, you are most likely not going to have problems raising money to get your business off the ground.
4. Find an angel investor
If you know of anyone whose net worth is north of 1 million dollars or whose annual income exceeds $200,000, you are looking at an angel investor.
Angel investors are a good source of capital for your business because they have the resources and sometimes the connections to get your business started. Even though they often operate alone, they can also rally to fund a business.
You will need a great pitch and a full-proof business plan to pique their interest and make them want to fund your business. Thankfully, you don’t have to know them in person. You can find them at angel investors showcases or other platforms like the Angel Capital Association.
Other greats ways of financing your business include checking with venture capitalists or getting friends and family to raise capital. Whichever option you are going to settle for, make time to weigh how it will impact your business, and most importantly, you must be convinced that you are making the right choice.