5 Ways to Fundraise for Your Small Business
There is also a lot of truth to the phrase, “Time is money.” The longer it takes to start the next project then the longer it takes for it to start working for you. Fundraising is a good way to get the cash you need quickly and there are a number of different ways to go about it. These different methods, however, do come with different levels of risks and rewards. Today, lets take a look at five fundraising methods you can use to help your business.
Old Fashion Elbow Grease
When looking into fundraising, the first question you should ask yourself is, “do I even need any outside help?” Most entrepreneur businesses start up with their own money, and for good reason. Other people, companies, and investors are not going to be very motivated to help if you are not invested and committed yourself. Step one will always be to work hard, count your pennies, and see what you can do yourself.
The downside to funding yourself is that it does take a lot of time and effort. But, you also build your credibility for future opportunities and investments. After all, no matter what method of fundraising you use one of the first things anyone is going to want to know is what you have already done.
I know there are a lot of different opinions about crowdfunding, but there is a huge market for it. There is currently an estimated $93 billion that will be invested by 2025. Secondly, it comes with the benefit of either funding your project or giving you the feedback that you need to further refine your product.
There is a lot of work that goes into making a crowdfunded project successful (regular updates, reward tiers, giving customer feedback, etc.). But, it also comes with the added benefit of not risking your customer equity. What you are looking for are kind customers who believe in your product…and who are also looking for a deal. If this sounds like a good option for you then take a look around online to find out which crowdfunding platform would work for you.
The Bank of Friends and Family
We are now entering into the territory of paying money back. Sometimes you are looking for more money than you can realistically raise yourself in a timely fashion. If you have a good support system of friends and family then they may be able to provide you with an interest free loan to get you over your next hurdle.
There is the danger of being indebted to friends and family, but with the added benefit of not having the sharks hunt you down should the worst case scenario happen (insert Jaws theme here). This may not be an option most people are comfortable with socially, but with the right planning and discipline it can still work out financially.
If the above options are not viable options for you then the next step may be to look at a traditional small business loan. Banks often have systems of credit built into their practices specifically for starting businesses. The risks involved, however, are that you will need to convince the bank that you have a profitable system, and/or you have some collateral or equity to include. As long as your payments are paid on time, a traditional loan can also help build you businesses credit. In short, a traditional loan comes with a lot of benefits, but they are also harder to obtain and shouldn’t be relied upon as part of your business model.
Angle and Venture Capital Investors
Sometimes, your business will need larger sums of money to move forward and this is where you may want to look into Angle and Venture Capital Investors. Angle Investors and people who are wiling to donate anywhere from $10,000 to $100,000 of their personal money and Venture Capital Investors are for donations in the millions. Though these are hugely different amounts of money the shared factor is that these investors are less interested in the individual product but in the company as a whole. As a result, they are going to want to see your company data and be given some ownership of the company in return for their dollar. It is still your responsibility to convince them your company and product is worth investing in, but Angle and Venture Capital investors have the potential to be your one stop shot for your fundraising needs.
Like I mentioned before, each of these methods come with their own risks and rewards, but they will also get you where you need to be. Money is pretty important and the sooner you can hit your goal amount the sooner you can get to work. Take a look at what your current and future needs are to decide which method would be best for you. Also, if you have any success stories, warnings, or ideas we haven’t mentioned here be sure to share them in the comments below!