Learning how to raise money for a business is one of the most valuable skills you could ever pick up. Your decision to start a small business puts you into competition with more than 30 million small businesses in the US alone.
How to Raise Money for a Business: 5 Tips to Rake in the Cash
So, before you pursue funding, it’s important to have the fundamentals in place.
- You have a great idea
- You have a plan for how to bring that idea to fruition
- You know who your audience is and what their pain points are
- You possess a good idea of what will be needed monetarily to bring your plans to fruition
Armed with this knowledge, we can get to our top five recommendations for raising the much-needed capital. Let’s examine!
1. Crowdfund Your Great Idea
If you haven’t considered this type of funding to start a business, you should. There is nothing to lose by putting your idea up on a crowdfunding site. It can work in conjunction with other efforts.
Furthermore, the earnings you bring in are yours to keep without having to pay any of it back. The caveat is that you often have overhead in the incentives that you create to encourage giving. Better have some great ones!
2. Apply for Grants and Fellowships
The Small Business Administration can show you where to look for start-up money for business ideas. You can also find such information through your local chamber of commerce, area universities, and, if you’re lucky enough to have them, business incubators in your area.
Grants and fellowships are among the options, along with lower-interest loans. If you don’t want to pay back the money, the grant or fellowship is the way to go. However, they can be very competitive and stringent, so make sure any stipulations won’t lock you into a way of doing business that you hadn’t intended.
3. Contact Potential Investors
Look to ancillary businesses in your industry (not competitors, but companies that support your competitors). You won’t necessarily get money to start a small business directly from them, but you can find potential investors by looking at who funds these companies.
4. Check Into Different Loans and Lines of Credit
Getting a personal loan or business line of credit can help you find cash for small business ideas in a way that either gives you all the money upfront or provides a certain amount that you can borrow if you need it. Lines of credit don’t require you to take all the money upfront while traditional loans do.
5. Check With Commercial Lenders
One final recommendation for how to get small business business funding is to check directly with a commercial lender. These types of companies can offer better terms due to their understanding of a small business’s needs. They can also help you streamline your ask, so you’re getting what’s required and using it in the right way.
Learning How to Raise Money for a Business Can Be a GameChanger
When you know how to raise money for a business, it becomes easier to do it again and again. This is true for the current business or any future one.
You can become a real gamechanger. First, however, you have to get in the game, and that means deciding the type of funding you will pursue and going after it. For more business finance tips and recommendations, check out some of our additional posts!
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