7 Best Strategies To Finance Your Small Business
Do you want to learn about the best strategies to finance your small business? Then keep reading. The most challenging thing that start-up businesses or already existing enterprises witness is “how to finance the business” which equally means how to raise capital for the management of their business activities.
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Capitals help hold a business together
Capitals are like a pillar that holds a business together and when they are not gotten, they will become the roadblock to the success of the business. But today I will give you simple strategies you can use to finance your business, so pay attention.
There are many ways you can finance your business but some of these might take longer processes before lending you the financial aid you need to run your business. In this article, I will show you seven ways to easily finance your small businesses, starting with the most reliable and easiest one, self-financing.
Self-Finance your small business with your personal money
As someone that wants to start a business, you are expected to have some amount of money you can use to run your business.
Some time ago, my friend wanted to start her fashion designing business but didn’t know how to get started in terms of finance. Then I told her to give herself a space of six months and save up any money that she gets.
She followed my advice and saved the exact amount of money needed in running the business. Today her business is flourishing massively thanks to her self-financing.
One good thing about self-financing is that it will give you ultimate control of your business without any external interference or control. Even if your business tends to fold, you don’t owe anybody the payment of their shares or return on investment.
Financing your small business by selling off your asset
The second way to finance your small business is to sell your assets. Consider selling a few of the assets you have, for example, cars, houses, lands, and more so you can come up with the amount of money you need for your business.
This is one of the commonest ways to raise money for your business.
Capital gains from selling assets can, in most cases, be used to offset other income. This can help reduce your overall tax burden. It can provide quick cash for startups and larger growing businesses
Your family and friends can help you raise money for small business
You can raise the amount of capital needed for your business through your relatives and friends. Although getting financial assistance from them can be tricky. Your friends or family know you closely so they might want to partake in running the business but without a doubt, it’s a safe means to get funds and finance your business.
However, before asking for their support you have to prepare a nice pitch that will entice them and urge them to support your business idea.
Follow these four simple steps before you can successfully get your relative or family to find your business;
- Be certain of the type of business you want to start,
- Be specific about the amount of money you need,
- Highlight the risks involved in your business,
- Get a Lawyer to sign your agreement with them.
These procedures will help you to win financial support for your startup business. Another way you can finance your small business is through grants.
Financial your small business through grants
A grant is an award, usually financial, given by a company or organization to help achieve a goal. Grants are often gifts that you don’t have to pay back unless you choose to receive payment for your work at the end of the grant.
The pros of grants are that it doesn’t require payback. The government or private organization gives grants because it helps in boosting the economy when potential business starts to flourish.
Want to learn more about grant writing? Check out my podcast interview with a professional grant writer: Grant writing and how to be successful in your grant with LaTrese Adkins.
Although getting government grants can be tough because of the processes involved in it but you can easily turn to different corporations that give grants to various businesses.
Bank loans can help finance your small business
Getting loans from a traditional institution is another means by which you can finance your business. However, these loans are not easily given out to entrepreneurs no matter the potential the business has.
What matters to the bank is what you can offer as your collateral security. Providing this collateral is a way they replace the loan given to you in case you fail to repay your loan and interest when due.
Here are helpful tips to effectively request a loan from the bank:
- Ensure you bank with them,
- Build a solid relationship with the bank manager,
- Be certain of the specific amount of money you need,
- Present your business plan to them,
- Present your loan request with confidence,
- Show them collateral that will equal the loan request.
These tips will help you to successfully get your loan request approved. Another way you can finance your business is through angel investors.
Finance your small business through angel investors
Angel investors can equally be referred to as seed investors or business angels. They are influential and high-net-worth individuals that provide financial aid to start-up businesses in exchange for ownership equity of the business.
These angel investors have organized themselves in such a way that individuals can easily reach out to them.
Here are the three top places you can find angel investors for your business:
- AngelList,
- LinkedIn,
- Angel Investment Network,
- Social Media,
- Angel Forum,
- Seedrs and more.
The next strategy you can adopt to finance your small business is through crowdfunding.
Use crowdfunding to finance your small business
Crowdfunding is a means of generating money through the small contribution made by a group of people. What makes this very beneficial and attractive is that these people do not need a return on investment made. Rather, a gift from the products or services you render might be all they really want.
Another advantage of crowdfunding is that it will give you control of running your business and more publicity through their platforms.
However, you need to understand how your chosen crowdfunding platform works. Before an audience will be given to you on their platforms you need to have a very good speech made that will with the number of targets you need to attract.
Here is a list of crowdfunding platforms you can join to raise money for your business.
- Kickstarter,
- Indiegogo,
- Go-fund me,
- Crowdfunders,
- Patreon, and more.
Of the different crowdfunding platforms listed above, Indiegogo is a clear choice for many people. It has an unparalleled track record of success in helping to fund over 800,000 ideas all over the world since 2008.
Your key takeaways the best strategies to finance your small business
Financing a small business is not entirely easy because it requires a lot of effort from your side unless you have enough money to finance the business. But with the above-stated strategies, you can successfully raise the funds needed to manage your business effectively.
However, before committing to any of the above strategies you have to consider its pros and cons.
I believe you have gotten some value from today’s article on how to raise money for your business. If you have any questions, please drop them in the comment section below and we will respond to you as soon as possible.Join AClasses Content Academy if you want to learn more about Content Creation Strategy and how to leverage content for your Business.
