HOW IS FUNDING OBTAINED FOR YOUR BUSINESS?

June 17, 2021  

This is the question that all entrepreneurs want an answer to. “How can I raise the capital needed to get my business where I need it?”

We all have dreams and aspirations for our businesses, but for some people that idea cannot be realized due to lack of money. Those lucky enough to start with what little they have soon realize they've gotten more than they bargained for: debt, emergencies, miscellaneous expenses, and expenses they never planned. With this kind of solution, two options are left: declare bankruptcy, close the shop and thus end his dream or seek financing. But where?

The answer to this question will be given shortly and by the time you finish reading this article you will know how to raise funds for your business. then okay?

1. Crowdfunding

You've probably heard this before, in fact I'm sure you have and would, except you have no idea how it works or even how to do it. The truth is, it's super easy! The internet has made it all easier, and today you can crowdfund the internet with websites that are there just for it: to help individuals and businesses get the funding they need for their businesses. Below I have compiled a list of the best. You should check them out and use one of them to raise money for your business:

• Kickstarter.com: It is one of the most popular crowdfunding sites. A lot of people have made their dreams come true by using this platform.
• Gofundme.com: GoFundMe is another crowdfunding platform known for helping bring creative projects to life.
• Other crowdfunding platforms you can make use of areUlule, Gogetfunding, We funder, Crowdfunder UK. You should try out all of theseoptions. They're worth trying out.

2. Apply for a loan

Have you thought about this yet? It is the next easiest way to get financing for your business.

A Small Business Administration (SBA) study found that “75% of startup financing comes from business loans, credit cards, and lines of credit.” This means that while technology is creating new methods of raising capital, most small businesses are still looking for the primary way to finance their operations. You should have one too!

However, in order for your loan to be approved by banks and other financial institutions, it must meet a number of requirements, such as:

• Must have been in business for 2 years or more.
• Your company generates a strong annual income.
• Good credit score.
• Keep your file at hand: profit and loss account, tax returns, bank statements, etc.

PLEASE NOTE, these conditions may differ depending on the institution where you lend money. And if you don't qualify, there are other types of financing you can look for such as equipment financing, invoice financing, etc.

Also, if your business does not meet the requirements, as you can see, getting a loan may not be the option for you; instead, you can crowdfund or choose the other options below.

3. Ask friends and family

This is a bit like crowdfunding, except in this case you know the people from whom you seek help. Raising capital for your business through friends and family remains one of the most viable options. Who else is willing to invest in you and your dreams? The people who care about you!

However, you should be careful in choosing who to ask for help. A content marketer and SBA contributor named Caron Beasley suggests that you limit the list of friends and family you would turn to for help only to people who are confident that you will succeed, who understand your plans, and who are clear about the risks, but also those with strong business skills.

This would help prevent any problems in the future. Also make sure you have a strong direction and a business plan. Trust me, you don't want to go to someone with half an idea.

4. Angel Investors

Angel investors are a reliable source of capital for your business. Typically, angel investors are people who have a net worth of $1 million or who receive an annual income of more than $200,000.

But like I said, you really shouldn't approach anyone, especially angel investors and venture capitalists, with half-hearted ideas. You need to have a solid business plan and a great launch ready. Pitching is all about getting their attention with enough data about your goals, your company's potential, and enthusiasm.

You only get one chance, don't waste it. Be prepared. To answer that novice question on your lips, you can find angel investors through the Funding Post or you can also contact the Angel Capital Association. It is an incredible platform to reach and meet angel investors.

5. Venture Capitalists

Venture capitalists are similar to angel investors, but not quite. Venture capitalists often try to invest in 'slightly more mature companies' and almost always want to say more about managing day-to-day operations.

You can easily apply for an investment from a VC firm, but again, your proposal is crucial! To help you even more, Sequoia, one of the most successful venture capital firms in the world today, suggests that when starting your business, you:

• Explain what has changed. Describe the innovation, industry change, or problem that presents a substantial opportunity for your business.
• Explain what you're doing. In one sentence, show how your company can capitalize on this opportunity.
• Explain the facts. Get quick access to your company's history and finances. Design the opportunity with numbers. Discuss the team and your skills and experience.

Ready to make your dreams come true? Use one of these six methods to raise money for your business, and before you leave, GOOD LUCK!