This article will cover tactics for raising money for a start up business or obtaining funding for working capital. Whether its money to start a business or capital funding to get your small business to the next level, at some point you may need to get cash quick. Here are some ideas that I’ve used.
I wouldn’t think of starting this article without first saying, there are many creative ways to fund small business expansion and start ups without borrowing a dime. I think you’ll agree there is really no better way to grow or start a business than debt free. In fact its done all the time.
Depending on the small business you seeking funding for, you may be able to structure contracts or payment agreements to allow you company to fund the costs of delivering through the customer. This gets into cash-flow and I talk about that else where, but never overlook what you have control over. Many contracting companies receive a half down payment before a project begins. When this money is managed intelligently, it can negate any need for outside funding for a small business. This is the free money. There is no interest, really no management,reporting, or invitation for outside influence. Sometime the best investments are the simple ones you can handle yourself.
Not all businesses that need a boost financially can go to the customer or cash flow model and wring out the working capital they need to operate. One way to approach raising money for a small business start up or expansion is to develop a specific plan, different from a business plan, develop a plan that might be tied to a specific product, idea, or project your small business would like to capitalize on. Many investors feel more comfortable knowing the working of a specific idea, and may be more open to funding a clear objective than an overall small business vision.
Another thing I’ve learned is to develop a plan to acquire money from investors. That is plural, don’t think all the money you need to raise has to come from one source. Once you know how much capital for operating you need, figure out how much you have. Lets say you have 10k available and you need 100k dollars to complete a project, create a product or set up a new process. Make a list of possible investors who might be interested. Figure out an interest rate or what your willing to trade for the money. I would suggest making a detailed plan of the project you need to fund and ask investors to sit down with you personally.
I’ve borrowed money from individual investors in small amounts, this worked well for me as banks were not interesting in funding my small business without tying up property and assets and also the process to raise the capital just took to long. You can let the investor know what your wanting to do, show them how you will make a profit and let them know you need 100k total and that you’ve already obtained 10k. Tell them what your willing to pay or trade in exchange for the money, when it will be paid back, and why you think its a win-win. The simply ask if they are interested.
When your dealing with investors its important to leave an open door. Don’t ask them to just invest in your company. If they say no, its a bit tough to ask them the same question 2 years later… If you approach them from an individual project standpoint, then they are only saying no to the project or idea.
Working capital and obtaining it is crucial to the success of you business. Implementing new ideas and expanding your business will require funding… Its smart to keep this in mind an always be contributing to a fund to allow for these expenses.
If you have had experiences obtaining capital for a small business start up or raising money for operating costs of a business venture, would you mind sharing with our readers?