The success of your business depends upon a lot of factors, from writing a business plan to looking for possible location, to finding your target market and most importantly funding. Here you will learn how to Raise Capital for your New Business
The need to have a great financial plan results in better business, increased output, rewarding return on investments, longevity of the business, etc. Getting funds for your business can be overwhelming especially with the general idea that everyone needs money and no one can possibly lend you that exact amount you require for the smooth running of your business.
The different ways capitals can be raised for startups and new businesses: Raise Capital for your New Business through these ways
Today, there are more than one way to raise capitals for startups. Depending on the kind of business you are planning on going into; the right crowd needed to invest in your business is possible. Below are the numbers of ways you can raise capital for your business.
This is the act of building your business from the beginning with no support from other sources but through your personal finance, which could come as a result of savings. It is possible to bootstrap by saving overtime, doing a part time job to raise capital, investing in Multi-level businesses, getting money as gifts from friends, family and loved ones, learn a high income skill, selling your property, building a brand through speaking, etc.
The best part about bootstrapping for one’s business is that the owner gets to have total control over the affairs of his/her business, and that keeps him out of debt. Also, the owner get to function at his/her own pace, focusing more on his goals and future prospect from his business without any pressure or external influence.
The side effect of this method of raising capital is that, it impedes growth; diminish the quality of the product and services as well.
2. Family and friends:
Borrowing money from family and friends is another way capitals are raise for startups. The pros and cons are much though, because in one way or the other your family and friends might interfere in your business especially if agreements are not reach on their roles in the business as much as the role of their money. Clearing stating boundaries from the onset is a great way to keep your business from facing financial dilemma in the future.
3. Raise Capital for your New Business through Crowd funding:
Crowd funding is more like taking a loan from more than one person. People get to see your business idea and why you need the fund to move your business forward and decide to invest in it if they really like your idea. The great thing about crowd funding is that you are advertising your business to a large audience which could turn out to be potential customers and clients too.
4. Angel investors:
Angel investors invest in business even when it is still an idea, this could also be seen as when no one wants to invest in them. The download side of these investors is the degree of control they might have in your business which could lead to you losing your control as part-owner. It is therefore, pertinent to be specific and clear about the possible risk of business failure. Raise Capital for your New Business by following the likes of Tony Elumelu, Strive Masiyiwa, etc.
5. Venture capitalist:
Raising money from venture capitalists is a bit risky, because, they invest in startups that have the potential for growth. In this way, they can have their return on investment as well as have some form of control over the business. Venture capitalists however, look out for business that are in need of finances for expansion and rarely invest on startups, but, startups can access their investment only if they are due for expansion.
6. Raise Capital for your New Business through Contests and Competitions:
Startups can pitch their business plans and ideas during competitions. Per adventure, you don’t win in the competition, you could be sure to attract investors to your business as well have media attention. Contests and competitions have helped to maximize the rate at which capitals can be raised at all times.
7. Business incubators/accelerators:
Incubators/accelerators work interchangeably in business, while one acts as assistance, the other function as the key the take-off of a business. Incubators nature startups and allow them to grow at their own, by, offering advice, guidance and all round support, whereas, accelerators speeds up the growth of your business and ensures that the product is ready in a small time frame.
The role of accelerators comes in handy in fashion designing, where the newer clothing line has to be in the market within three to six months of birthing.
8. Raise Capital for your New Business through Bank loans:
You will agree with me that whenever the issue of raising money for businesses is mentioned, our first thought goes to getting loans from banks, yes it works, but banks are mostly not interested if your business will run smoothly or not, they are mostly concerned with your business’ exit strategy. How you intend to liquidate the business if you’re no longer in business. Thus, much emphasis is placed on collateral than profits. Other debt options apart from banks include financial tech co-operation, Economic Development Organizations, Merchant Cash advance, revenue based-financing, etc.
9. Purchase order financing:
sometimes, we hear that one do not need money to make money, it is true in this scenario, depending on the type of business you are going into, you could purchase the goods and materials needed to keep your business running and pay the agreed pricing to the company after the goods has been sold. This can be applied in already-made products like packaged foods, deodorants, perfumes, already published books, etc. Thus, if you’re going into a manufacturing business which will require manufactured goods, you will be quality for purchase order financing.
10. Upfront payment:
Getting customers to pay before providing the required service is one way to start a business with no capital. Businesses like Website development, Road construction, Home-sewing, Home-catering, etc., require clients to profit the capital to produce the product/offer your service and to generate profits after the product/service has been delivered.
11. Raise Capital for your New Business through Grant options:
grant options has been made available by government for startups. It does not require that you pay back the grant you received but it involves a lot of stress due to the accumulation of paperwork to be done before you can fully access your capital. This is a great way to raise capital for your New Business.
in a nutshell, the best method to raise capitals for your business is the one which has the best interest of your business at heart. Thus, you need to spend quality time and do your own investigations especially regarding the terms and conditions involved in each method.