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Starting your own small business is a major undertaking regardless of where you live in the world. There are many hidden and unexpected expenses that can occur when you are starting your own small business. For this reason, it is important that you are always actively considering viable ways to raise capital that get you into the minimal amount of debt possible at the beginning. When considering unique, yet effective ways to raise funds for your small business, it is highly recommended that you consider the information below:
6 Ways to Raise Funds for Your Small Business
Crowdfunding: Crowdfunding has become quite the phenomenon on the raising capital scene recently. The reason for this is that crowdfunding provides opportunities to prospective small business owners that they would not typically receive from typical banking loans. Crowdfunding requires small business owners to create an attractive campaign that is appealing to potential donors. Additionally, it is recommended to provide a gift to those that contribute to the development of your projects as an act of good faith. Crowdfunding has allowed individuals all over the world to raise substantial capital.
Small Business Loan: There are special brackets of loans that are catered towards small businesses. The advantage of using these loans is that they have a lower threshold to comply with than traditional business financing options. For those small businesses merely trying to establish their credit score, this is a very attractive option to consider. Be sure to shop around for the most competitive interest rates and devise a way to pay back loans as soon as possible to avoid paying more than you need to.
As an example, Capify helps small businesses in Australia by providing a big range of loans (from $5,000 to $400,000) with a loan term from 3 – 15 months, no interest rates and everything available with an easy online application. This and many other great benefits allowed Capify to win the prestigious 2016 Australian Business Banking Award for Best Business Lender.
Angel Investors: Angel Investors are a very powerful potential tool for raising capital for small businesses as well. Angel Investors will look at a business plan and decide whether they would like to invest in the project. The key to attract an angel investor is to have a professional business plan that makes you attractive to invest in. This is important for entrepreneurs to realize so that they take the proper time to attract a reliable angel investor to their company. It is also wise to carefully research the portal you are picking angel investors from to make sure that it is well-established and legitimate to avoid potential fraud.
Government Grant: Depending on the industry that your company is in, there could be government grants that are applicable to you. It is important that you research your industry carefully when making your business strategy and speak to experts within the field. Through doing so, you will be able to find out which potential grants you are eligible for and apply to take advantage of those grants. Many of these grants also have future potential tax benefits that will serve you well down the road.
Business Partner: If you are short on startup capital, it is popular to take on a business partner because they usually don’t require the commercial history that you do not have at the beginning. It is important to be careful with this option to ensure that you find the right ethical individual that shares your vision for the growth of your company. The majority of clashes occur due to financial and strategic business disagreements Additionally, be sure to have a clear and concise partnership agreement drafted to outline ownership percentages and plan for sharing profits. Clarifying these details from the beginning is essential to your ultimate success.
Disadvantaged Groups Grants: Many countries have societies that target disadvantaged groups and their goals of starting a successful small business. Some examples of disadvantaged groups can be small business owners, female small business owners, and ethnic groups business societies. It is important that you are ready to take advantage of these opportunities. By doing so, you will have a larger amount of potential funding available to you because there will be less competition that other funding opportunities. If your business is abroad, it is usually best to go to the local Chamber of Commerce to get the information regarding which funding opportunities your small business is eligible for.
Final Remarks on the Subject
A common misconception is that you start making money right away when you start a business. This reality could not be further from the truth. Adequately planning your startup costs is something that is vital for you to get to the stage where your business becomes profitable. If you are ineligible for traditional financing methods, it is wise that you look into other alternatives to raise the required startup capital that you require. By taking advantage of these opportunities, you will be able to ideally get to the next step of your business’ development without higher risk and debt at the beginning.