by Laiza King
“Fundraising is going to be the death of me,” said Tom Walker, President and CEO of Rev1 Ventures, in an interview with Dave Keplin, CEO Likable Local.
Any entrepreneur who has gone down the startup route would testify that raising funds for a new business venture can be one of the most frustrating and discouraging aspects. You can be very passionate about your idea and go about trying your best to convince potential investors that it will be the next big thing. However, you may still not get the required funds in order to keep afloat.
While finding an investor is certainly feasible, any startup business owner should think of multiple different ways of raising capital for the business.
Here are five great ways to explore:
1. Friends and Family
Sometimes, people invest in the person and not in the idea. And who knows you better? Your friends and family! Turn to them first as they are more inclined to support your startup than total strangers. This can be the first round of your startup capital to get the ball rolling.
However, it may create a negative impact if your friends and family invest in your business. Should your startup fail, there may be problems in the relationship you have with them. A wedding ceremony of a distant cousin may result in a discussion on how well or how badly the startup is doing and could lead to a certain level of awkwardness. To ensure against these situations, it is advisable you are very clear about any risks involved upfront and not spin tales of profit that may be too good to be true. Also, only borrow money from people who you feel can afford the loss or would be mature about the loss. It is the wisest thing to do, I assure you!
2. Get a Bridging Loan
What is Bridging Loan?
Bridging loans are a specific category of short-term loans that are often easier, less stressful and quicker to get than most other traditional loans. They cover the financing of bricks and mortar buildings for offices, shops, stores, properties, as well as machinery, tax bills, insurance premiums and so on.
Even though they cater to a wide market, groups like Jubilee2000 still specialize in providing loans to startups and small businesses that may not otherwise have access to funding.
By working with a team of reputable money lenders, they are able to make arrangements for both short and long-term loans for projects that traditional banks may hesitate to fund.
3. Crowdfunding
One of the trendiest ways of raising funds in the world today is through crowdfunding. Basically, it is a brilliant way to raise funds from individual investors. Sites like Kickstarter are more popular than ever, where their particular focus is on helping receive lots of small donations from regular citizens and push it to fund startup projects or existing business where cash expansion is sought. In return, investors either get an innovative product or service or something else that you both agree on. It’s basically a win-win situation and works for everyone, especially projects that can’t get traditional loans (i.e. publishing a book through crowdfunding).
Also, there are other funding options like debt funding from Angel investors, capital firms and accredited investors. Teams like Fundable specialize in this particular area.
4. Business Partner
I don’t have the money but I have the ideas! Oh, you have the money? Let’s team up!
That sounds great. Most successful business owners today started out with business partners. Funds are pulled together and your money troubles are over. You won’t have to worry about the power being cut off in the middle of your working day just because you haven’t paid the electricity bill. However, note that when selecting a partner for your business, you need to ensure an alignment of goals, as there could end up being difference of opinion and it all could come crashing down. So make sure that all parties concerned agree to the direction the business is going. Having a buyout clause in your contract is also a great idea, as no one can predict the future!
5. Save costs
You save money to have more money, right?
Nothing may be scarcer than money – or a lack of it – when you start your business. We even have nightmares about it in our sleep. There is always a need to do something with money. However, you can save costs on your operations so that, at the end of the day, you have extra money to run with.
Employ pay as you go style. Don’t have redundant staff on your payroll. You need a writer? Look for a freelancer online to do the job, pay them, end of story. Having a writer on your payroll when you don’t need them daily would be a waste of money that could be beneficial to other areas of the business.
Share office space in a complex. If most of your work is online, I don’t see why you need a large office with a plush waiting room! When you share office space, you can also share utilities; computers, printers, copiers, even the coffee machine. Leave out capital purchases unless they are vital.
Look for Bargains! You may be amazed at the amount on discount you would get from suppliers. Save money you would spend on traveling for a business meeting and teleconference instead. Hire staff you need as interns from a college close by or a business school. Seriously, you would save a ton of money and discover that you can afford that new software to make your job easier.
Taking onboard some or all of this advice could be enough to kick start your very own business. So, why not start today?