There have been many articles posted on web sites about how to raise capital for a small business. However I would be very skeptical about these tips that are offered from unknown business consultants. They are sometimes written by people disguised as entrepreneurs. Therefore I have complied this list of the best ways that I can find to help entrepreneurs raise capital without the help of a bank.
The biggest challenge that new business face is the ability to manage cash flow, so that they are able to keep their business running. However finding the money can be more challenging than one would think. Even an experienced entrepreneur that has worked hard to save some cash will most likely need more capital. Therefore before you start looking for capital you should be sure that you need the money. Being financially constrained can make people very creative and this can result in a business model that is more innovative.
What follows is a list of some of the most common ways that you can raise money for a small business.
- Use your own money first – If you have the money to fund your start-up business, it will get you the highest percentage in profit when and if you decide to sell. Another point which is even more important is that businesses which are self funded ensure that the decisions that you make are not being controlled by any outside investors. The most motivating thing is to know that your money is on the line daily. This might sound like the best way to start but it usually only works for people who already have a lot of personal wealth.
- State-based grants– The U.S. government doesn’t offer grants for small businesses however you can find lists of state-based grants on the internet. This can be hard work, applying for funding, but it will be worth the trouble. Therefore the more attractive your business is the more grants you might be able to get.
- Use your credit card– This might sound strange to some people however when getting a bank loan or a grant is not possible a business credit card can be a lifesaver. Get a business credit card right now if you don’t already have one. It can be the first step in getting some business credit. Some business advisors says it is usually better to make using credit cards for businesses. If the business is not successful you will not be saddled with a large credit card debt with high interest rates.
- Get on the side consulting work– Getting capital isn’t only about getting money from others it can also be about making money to fund the business by yourself. You can use money that you earn while consulting or other side projects to invest in the business straight away. This means that you do not need to pay interest on your capital investment.
- Angel investors-As you might be able to guess an angel investor is a person who has wealth and is kind. They want to invest their money into a start-up business. Sometimes family or friends can take a percentage of the company’s assets on you can repay the investment. Angel investors give business owners flexibility in expanding your business and not very must outside control. It is becoming a popular way to get capital for a company.
- Venture Capital (VC)– This is a funding method that is covered in secrecy. Most people do not really understand how VC works and how to get it. This only happens until they go through VC funding. Some people resist the VC idea until they see how fast things can move.
Not every tip will work for everyone or business and getting a loan can still be something you want to consider. It is must surprise you how much easier it has become to get a load now. Loans from a bank require an amount of collateral that is secure. They might not be offered with great terms. Make sure you read the time print on the load agreement before you sign the application.
