5 ways to obtain capital for your business.
Whether you’re looking to start a new business or expand an existing project, you’re probably going to need additional capital.
Where does this money come from? Here are five places to start looking.
1) Yourself. Ask yourself how much you believe in your idea and how committed you are to its success. Are you willing to gamble your retirement fund on this idea? If not, why should someone else?
“Many successful entrepreneurs put nearly all their savings into their small business,” Drew Hendricks, Forbes contributor, writes. “That helps catch the eye of investors because it’s clear you’re fully committed to the project.”
2) Crowdfunding. You have a great idea. You believe people will want to support it. Crowdfunding may be the way to go.
Crowdfunding, or collaborative funding, is a practice of raising small amounts of money from a large amount of people, usually online. Share your vision and your passion on social media and you may be able to patch together the funds you need.
“Crowdfunding offers [small business owners] a chance at success by showcasing their businesses and projects to the entire world,” Tanya Prive, Forbes contributor, notes. “There are numerous crowdfunding platforms where consumers can safely ask for or donate money such as Kickstarter, Indiegogo, RocketHub and Onevest.”
3) Start saving! The easiest way to start raising capital is by taking a look at where you already spend your money. Go paperless with your invoices and checks, sell your empty ink cartridges (Forbes reports you can sell them for about $20 a cartridge), rethink your bundled TV/internet services (is it necessary to have cable in the break room?) and even consider a garage sale for your business. Every dollar helps.
4) Seek venture capital. The Small Business Association explains that venture capital investments are generally made as cash in exchange for shares and an active role in the invested company. You may be able to raise money fast – but you’re also giving away a great deal of personal control.
“Equity capital or financing is money raised by a business in exchange for a share of ownership in the company,” the SBA explains. “Ownership is represented by owning shares of stock outright or having the right to convert other financial instruments into stock of that private company. Two key sources of equity capital for new and emerging businesses are angel investors and venture capital firms.”
5) Get a business loan. “Bankers say that small-business owners looking for a loan should start by knowing what business measures — debt-to-equity ratio, for example, or net margins — lenders focus on when evaluating loan applications in their industry,” Scott Medintz of The New York Times writes. “Bankers say would-be borrowers should demonstrate exactly how they plan to use the money and why the plan makes sense.”
If your business needs capital, your first meeting should be with a Northwest commercial lender to discuss all of your options. Click here for more information..