5 Smart And Easy Ways To Raise Capital For Your Business Idea Or Startup
- September 13, 2021
- Posted by: Scale My Hustle
- Category: Business Finance
Except you’re surrounded by millionaires and billionaires who are willing to financially support your business idea and scale your business to its maximum potential; you are not immune from the financial challenges many startups and businesses face – especially at the early stages of the business.
Every business needs some form of financing at every stage. Funds for starting a business; purchasing inventories; expanding the business; strengthening its finances, and more.
Money isn’t easy to come by these days, but there are financial methods that you can practice to help you raise funds for your business idea and expand it.
Your business deserves growth through all the financial support it can get, and this article is all about that. You would certainly find one of the options a perfect fit for your new business’s fund needs.
Bootstrapping has its origin in the early 19th century with the expression “pulling up by one’s own bootstraps.” It is now defined as building a company from the ground up with nothing but personal savings, and with luck, the cash coming in from the first sales. If you are not into a business that needs a huge form of funding, let’s say, transportation or manufacturing, you should consider investing your own money into the business. This is a good method as it reduces the risk of extensive loans and monthly payments that can often be a burden. It is also a perfect way to attract investors and lenders who will be motivated to partner with you when they see you put your money in the business. You can bootstrap your business by tapping into your personal savings, home equity, family assets, etc.
Ask your friends and family
Your loved ones – the ones closest to you – can be a source of funding for your business. It is a great step to consider before you can receive external funding. You might be shy to reach out to your friends and family at first, but if you look closely within your circle, you can find an aunt, cousin, or friend who is convinced and impressed enough to give you some financial backing. With your friends and family, you have a flexible repayment method as you don’t have to deal with a strict regulation financial body.
Crowdfunding is when small amounts of capital are gathered or pulled from individuals to fund a new business venture, typically through social media platforms and crowdfunding websites. In crowdfunding, you pitch your idea to an online audience, and if they like it, they support you with their funds. Running a successful crowdfunding campaign isn’t a walk in the park, so you must be able to prove the value of your product, develop a convincing story – people want to know how you intend to run with your business idea – and why you need the support you seek. To get your crowdfunding campaign started, check out these most used crowdfunding websites: Kickstarter, GoFundMe, and Indiegogo.
Apply for a loan
If raising funds from your family and friends or crowdfunding is not your thing, you can choose to apply for loans to fund your business. Loans remain one of the oldest traditional methods of financing a business venture; they are gotten from banks and similar financial institutions. To get loans, you will be required to meet special requirements like:
- Proof of a well-detailed business plan
- Personal and business credit score – to show the business owner’s creditworthiness and that of their business
- Bank statements – for evaluation of your business finances
- Certificate of business registration
Applying for a bank loan can be a difficult process, but it’s a worthy process as you don’t have to give away any equity to get a bank loan.
According to Investopedia, an angel investor (also known as a private investor, seed investor, or angel funder) is a high-net-worth individual who provides financial backing for small startups or entrepreneurs, typically in exchange for ownership equity in the company. They are accredited people – mostly established business professionals – with economic resources who are capable of putting their money into a business that’s at its early stages.
Angel investors are a good source of funding for your business. All you need to do is have a solid business plan well put together that can capture their attention and convince them of your business’s future potential, and create a great pitch.
Big tech companies today such as Google and Yahoo were funded by angel investors. Angel investors also provide guidance and offer advice to business owners. You would find a list of top early-stage investors in Nigeria here.
There are many options to raising capital for your small business. You can always try one method if the other fails you, and don’t get discouraged in the process. In the end, you will raise the needed capital for your business if you are persistent, and we hope you’ll come back to tell us the best financial method that worked for you.
Featured image: istockphotos