Whether you're just starting out in business or you're a seasoned entrepreneur, having the money to back your dream project is the key to your success. Lets face it, bringing your ideas to life takes more than just passion!
The good news it that not having sufficient cash in the bank does not mean that you have to stop your dream. You can find a number of different ways to raise the money the that you need.
So why not follow in the footsteps of some of the worlds most successful entrepreneurs and raise your capital so that you can start your dream today, rather than save your capital and wait months if not years to get started.
If You can answer YES to any of the following then this article is exactly what you need to read.
Everyone can do with a little help sometimes, and it’s ok to ask. The worlds needs people just like you to bring your dreams into reality. Don’t let your finances hold you back!
Read below and learn what is the right path for you and your business…
So what options do you have to raise capital? And how do you go about it?
Here are our recommended 7 steps to Raising Money for your Business start-up:
It makes sense that investors will have increased faith in a venture where the owner has shown confidence in their own creation, and abilities, by putting their own capital forward. And investors with greater faith in a business are typically more willing to support them.
However, investing your own cash in a business venture can create an emotional connection you’ll need to overcome; the anxiety that comes with risking your own money can drastically affect your ability to keep a level head, make business decisions, and take necessary (but calculated) risks in order to further your business.
In order to remain emotionally detached from the investment – and to prove your business worth to investors - the transaction should be treated as professionally as possible, just as it would be if the investment were coming from an investment company or business Angel. Receipts, accounts, and records must be kept to document the investment and how the business plans to use it.
Credit may be a viable option to raise capital for your business, although due to the high-interest rates and repayments, it is one of the least cost effective ways to secure income!
For those who are in a position to take out a loan or load up a credit card, one of the benefits is: banks tend to listen to one another. Once one bank has approved you for a business loan, account or credit card, others will follow and you will have the opportunity to shop around for better rates and benefits (which will vary from bank to bank.
In order to create a better reputation for your business there is no need to use the credit you originally applied for – just""having""it will open doors for you and your business.
If you’re stuck with a bad credit history or low credit score, finding credit will be more difficult. This is due to the increased competition for business venture capital and the gradually tightening conditions of being accepted for credit. It’s vital you begin planning to increase your credit score as soon as possible, to secure the future of your business, and there are a number of ways to do this.
Start by focusing on making full and on-time repayments on any current contracts and cards you may have; this is the first and most important step. Plus, before considering taking on more credit in order to boost your credit rating, take your budget into account and ensure that you are comfortable and confident in your ability to easily make the repayments, on-time and in full, each month.
The next place to look on your search for venture capital? Close to home.
Friends and family are much more likely to invest once you have shown confidence in your business and have the support of the financial experts.
But remember, if you do secure investment from relatives and existing connections, it is important to treat these transactions with the same – if not greater – sense of professionalism as your other investments.
Make sure you have all repayment details down on paper, and that you document each reimbursement – so there’s no room for dispute!
On top of this, try to maintain communication with those close to you who have invested in your start-up, not only making your gratitude clear but also giving updates on how the purchases have gone and how the money is creating a return for both the company and the investor.
Don’t have family and friends who are financially able (or willing) to help you out?
Next up, try local business support groups. Most local areas will have multiple start-up support organisations and charitable companies offering start-up loans and grants to new businesses. And many also offer mentor support and fantastic links to local business successes who can offer advice, invaluable connections, and networking opportunities
When searching for start-up support companies to assist your business, weigh up the opportunities each organisation can offer you. And take into consideration the loan and grant amounts available and the interest and repayment rates
Some companies offer 0% loans, whilst others (mainly government subsidised organisations) may offer grants which do not need to be repaid at all, although this is increasingly rare.
Depending on your personal circumstances before launching your business, you may be eligible for government funded and benefits-based assistance and mentoring for your business venture too.
Strategic partnerships are agreements between two businesses, with the shared incentive of business growth and joint marketing. Meaning, you can share the workload while reaping bigger rewards than if you’d go it alone. These partnerships include links with stockists or parts production companies.
By this point in your journey, you should have started to get your business’ name known and be growing your reputation as a business of the future.
You want to be able to demonstrate great prospects which can mutually benefit a strategic partner.
The partnership does not result in excess capital for your business but is intended to provide your business with products, parts or services which would be paid for ordinarily, in exchange for promotion for the partner business. This promotion might take the form of logo sharing, and credit or mentions on packaging and promotional materials.
Most of the businesses you approach will be accustomed to the usual business-tobusiness sales method – they provide the products or services and you pay them. So don’t be surprised if on hearing a slightly different proposition, it throws up a lot of queries!
Be prepared for questions like "Why should we partner with you instead of retaining you as a customer?".
In order to secure a strategic partnership deal, be up front about your proposed business relationship, and ensure that both parties benefit from the arrangement.
Then, prove it to the potential partner!
Your proposal is more likely to be successful if you target businesses of a similar size to your own, where the potential to grow together is higher. Make sure you’re well prepped and put forward a proposal in detail, to really convince the owners that your business is worth investing in.
After improving your credit score, proving your dedication, and securing partnerships with great potential - you may have already begun to see some interest in your business!
Now is the time to push your name and brand in an attempt to generate more interest, and get inquisitive potential customers excited and asking questions about your products.
Free marketing is easy to come by and difficult to harness, so try to choose the methods most suitable for your sector and target market.
Join forums based around subjects your target market’s interests, send press releases to bloggers, magazines, and media outlets who fit your niche, and network with people who are already influential within your market.
Social media and the internet are full of people having creative and useful discussions surrounding any topic you can think of, so it is almost guaranteed that you can find an online community who will be interested in your product – however ‘specialist’!
Avoid coming on too strong or sales-orientated though; introduce yourself and your idea and try to discuss the needs of the people within the group. The aim of this is to increase the reputation of your business and let interested people know that you exist and are developing something they will want.
Building on the interest you have generated so far, it’s time to make your business irresistible to those who have been paying attention to your product or services so far. Offer an ‘early adopter’ incentives to those who’ll be intrigued. Think of Beta testers in the video gaming industry; with enough anticipation, consumers are willing to pay to be the first to try and give feedback on new products or services in areas that really interest them.
Not only does offering test products or early access samples provide a great way to bring in extra funding, it will also boost your business’ reputation.
Early adopters are often eager to tell other people in the niche about the ‘next big thing’ they’ve discovered – in turn, growing your early adopter market further and creating a real buzz!
Plus, these first customers will also be able to give feedback about the product – enabling you to develop and create features to better meet your market’s needs, whilst generating income to improve the production and features accordingly.
Your early adopters know who you are, they like your product and they want to see it through to completion; other people have heard of your brand and are interested to see what you can provide; you have created a name for yourself on internet forums and across social media, and now you just need a bit more funding to create your final product which is ready to satisfy your market…
We might be a little biased but, crowdfunding really is a great way to generate funds while keeping in control of the business you’ve worked so hard to get people excited about!
Once you have built a stable foundation of people who are interested in your ideas, innovations, and products, you can begin to plug for donations to make it happen. This doesn’t sound too dissimilar from the early adopters paying to gain early access already, right? And it’s not.
Except with crowdfunding, you can provide different levels of entry for people to support you. Opening up the opportunity to get funded by both people who have a tiny curiosity or those who are begging to get their hands on the final product.
Crowdfunding means that you can give updates to your supporters at important intervals and milestones, as well as offering incentives relative to the size of the donation.
It’s not a new player in the start-up fundraising game, and nowadays most people with an internet connection know what to expect when they invest in a crowd-funded product. In fact, public reception to crowdfunding just gets more and more positive!
The highest-earning crowd-funded campaigns are based on descriptive content - letting backers know exactly what they are putting their money into.
Success comes from providing regular updates; both sharing information about the product’s development and showing gratitude for any investments made so far. Plus, it relies on effective promotion, whether that be via forums, social media or even mainstream media outlets.
Crowdfunding is a great way to raise start-up capital for your business, and highly rewarding! With each donation, not only do you gain the financial support you need, you get a greater understanding of how potential buyers are going to react to your business, plus you build a tribe of loyal supports during the crowdfunding life-cycle.
It’s not as simple as having an idea and starting a fundraising page, however...
Crowdfunding relies on exceptional marketing and promotion. People cannot invest in something they have never heard of… so it is vital to build-up to the launch of your crowdfunding campaign; whether that’s through word-of-mouth, social media, working with influential blogs, or carrying out viral stunts.
You need to make sure potential investors are excited, aware, and prepared to open their wallet and put down money for a product that they really want – but can’t yet have!
So, where are you at?
Leave us a comment and share your next challenge when it comes to raising capital, or CLICK THE LINK at the bottom of this page now and start your crowdfunding campaign today!