It can be expensive, or at least, outside of some people’s means to start their own business. There are different ways of doing it cheaply, but these ways often lead to minimal sales in the first year. It can be a better option to raise some money for your business before you start it so you can spend it on marketing and advertising. There are many options to raise money for a small business. Some are more time-consuming or risky than others.
Here are some tips on raising cash for your business start-up.
Do You Want to Pay It Back?
Small business owners often take out loans, spend them on their businesses and then the business folds and they are left with a lot of debt that they can’t payback. When you take out a loan, you should always consider exactly how you will repay it. Sales expectations almost always do not meet reality. It might be that you only make five sales in your first six months because you have not reached your potential when it comes to marketing. It might also be that you spend a bucket load of money on marketing that is not the right kind for your business. Setting up a start-up as a new entrepreneur is full of learning curves. Don’t shoot yourself in the foot before you have even left the starting line by taking out a loan that will destroy your business. So, the answer is no – you don’t want to pay it back.
Governments, councils and other governing bodies often offer grants. These you do not need to pay back, they are given to small businesses to help drive the economy. Chances are we will start seeing more of these as our economy tries to rebuild after the pandemic and Brexit. Check out your local council or government website and see which grants you are eligible for. Try not to get tricked into accepting a loan, as the loans on these sites have much lower interest rates but no loan is a good option when you are setting out and have no idea if your business will hit the targets you expect.
Nowadays, it has become acceptable to ask the public for the money to run your business. Crowdfunding is a great way to gain followers, money and subscriptions to your business. It is especially useful if you want to make a product or invention. You can set up a crowdfunding page relatively easily. Add a video and some information about what you want to make. Offer bundles that you will honor if you gain enough money to create the product or invention. These are packages that people can buy with their money, so they aren’t just giving you their money for free. You might also find that if you create enough buzz around your crowdfunding, you receive some serious investors which can dramatically boost the prospects of a business in minutes.
Remember to properly brand your crowd funder with a logo and a professional style. You want people that trust in your brand and business and get excited about being a part of it. You can visit this free-to-use logo tool to create your own in a few minutes.
Be careful you are honest with yourself about how much money you will need to create the bundles and do not make false promises. Go into detail when you plan the crowd funder to maximise its potential.
There are many ways to maximise the money you have available to you when you take some time to research and plan. Gaining money for your business does not all have to come from sales, but it can also come from grants and crowdfunding. You might want to try doing both these options and get creative about more ways. You can always use more than one way. Just try not to borrow money that you can’t pay back and be realistic about it.