In the first five years, over 50 percent of businesses fail – and 82 percent of these businesses fail due to poor cash flow. This explains the need to have your financial house in order before launching your business.
While your idea may promise significant returns on paper, the reality is that you will need to inject a few bucks for it to grow. With limited options, how do you stay on track in launching your business? Here are five tricks to help you raise enough capital for your business.
Bootstrapping
Bootstrapping is the idea of investing in your own business by simply injecting funds to your concept as you work on it until it gets profitable. Typically, these funds include credit card financing, personal savings, and any equity that you may own.
This trick is of great benefit if you wish to remain debt free while also avoiding hefty monthly payments. However, if you want to grow your business faster, then you need to consider soliciting for outside investments.
Consider taking a bank loan
Banks are notorious for funding growing businesses; only on rare occasions will you find a bank investing in a startup. This is because investing in an unproven model can be of high risk. However, if you have an excellent credit score and your business is making average returns, then this can be an ideal option.
Before taking any loan, ensure you have searched for a lender who has reasonable terms. This will be a great advantage when it comes to paying monthly fees. A five dollar difference may seem insignificant when making monthly payments, but it is a considerable amount when calculated in one or two years.
Explore an alternative source of funding
If you are looking for the loans there are few best small business loans, probably between 25 to 5000 dollars, then you need to consider visiting several micro firms for funding. These organizations are ideal for funding startups. Another viable option is the use of crowd-funding.
This includes the use of websites such as Kickstarter and IndieGoGo. Individuals across the internet raise small amounts to help you start your business. All you need to do is to set up an account and indicate a target amount. From there, you will offer several perks to donors who decide to pledge any amount.
Consider joining small business development centers
In case you are launching a tech-related company, then you should check out your local area for small development centers. For instance, the Small Business Administration has over 63 centers distributed countrywide. These centers are ideal for attracting angel investors. Additionally, you get to network with like-minded individuals who can help you streamline your idea.
Try asking your friends and family for support
It may sound harsh asking your friends and family for help, but this is the best way to start your business. They may not fund your project fully, but the small amount you get can go a long way in ensuring you move one step closer to making it a reality. However, before asking for support, ensure you have a business plan ready. This will help you to answer all questions that concern your project.
