How Do I Raise Capital For My Business?

Thanks to the internet, it is easier than ever to start a business. However, this does not mean that you shouldn’t follow the standard business protocols or that you won’t need to raise capital. Even if you have an established business, you’ll need to access capital at some point in order to expand or maintain your operation. In fact, not having enough capital is one of the primary reasons that businesses fail. In order to avoid becoming another statistic, you should have enough funding to run your business for an extended period of time.

To make matter worse, the world of corporate finance has become much more complex. The mainstream banks are tightening the requirements and lending less. This means you need to find the necessary capital elsewhere if you are going to fund your business. In response, many options have surfaced for entrepreneurs to secure the capital required for their ventures. Here there are options that you can look into today.

Capital Partners

There are several dedicated capital partners which you can contact. They will help you to locate the finance you need and structure your equity accordingly. These firms operate outside of the main banking structure and are free to select their own lending criteria. While this could come with higher rates, it could give you the flexibility to get your startup or business funded.

Friends / Family

Depending on how wealthy your friends or family are and the amount of finances you need, you may be able to ask for their support. Of course, you need to ensure that they are not left short and they understand the risks. Your friends and family would be happy to support your successful venture. But, they need to understand the risks. Otherwise, it could be a major strain on your relationships. It is advisable to draw up a proper legal contract before you receive the funds.

Crowdfunding

Crowdfunding is actually an ancient concept but one that has become extremely popular through the internet. In return for a future product or sometimes even a share of the business you can put your idea and needs into one of the crowdfunding sites and hopefully raise the capital you need.

Private Investors

You’ll need to track down the right people to approach. It can be a real challenge to find private investors for your business. They are usually business people who have experience in the industry that you’re operating in. You will then need to arrange an appointment with them and show them your plans; particularly how your product is needed and how you will sell it. If the private investor likes the idea, they will invest. Of course they may want a share of your business or dividends in the future.

Venture Capitalists

These work in a similar way to private investors but are much more difficult to persuade! You will need to meet their strict criteria to access the funds. However, if you do get access then you’ll have all the funds you need and will benefit from their professional experience. This can make a huge difference to the success of your business.

Mainstream Banks

The mainstream banks are tightening their lending rules but this does not mean they are not lending at all. If you have a solid business or a great concept accompanied by a good business plan, then you may still be able to convince them you are a good investment. While taking on a business loan might require collateral, some commercial banks offer competitive interest rates. This is generally one of the easiest approaches for individuals starting out; providing your credit record is good.

Customers

If you have an established business and a loyal customer base it is possible you can use them to raise additional funds.  In exchange they get a product free or a discount; depending on the value of their investment. You may even be able to do this with a retail outlet providing they have the right to sell your product and no one else does.

The important thing is not to give up! There is always a way to raise the capital you need; all you need is a good business idea.

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