The capital needed to start and run a business can often be a major deterrent for aspiring small business owners.
How do you raise money to start a small business?
What options are there for raising funds?
Luckily, there are many different options out there for aspiring business owners looking to raise raise capital for their new business.
Here are five ways on how to raise money for your small business.
1. Bootstrap Your Business
If you’re looking to get your business off the ground, but aren’t willing to put in much of your own money, take on a bank loan, or seek out investor help, bootstrapping your business is a possible option.
My thoughts on what bootstrapping actually means has changed a lot over the last year. I firmly believe that you can get your business off the ground with minimal money invested (domain, website hosting, etc).
By focusing on finding organic ways to bring traffic into your website (non-paid traffic), you can start selling your product or service without investing a large amount of money up front. Using marketing strategies like SEO (Search Engine Optimization) and social media marketing, accomplishing this is very possible.
This is often a much longer route, but if you aren’t in a position to invest money, it may be the best route for you.
A previous guest on the Nine-Five Podcast, Ray Blakney, talks about how he managed to bootstrap multiple 6-figure and 7-figure businesses using a simple SEO strategy.
You can listen to that episode here:
2. Use Crowdfunding Sites
Over the past few years, sites like Kickstarter, Indiegogo ,and GoFundMe have been an extremely viable option for new businesses looking to raise money.
Kickstarter, being one of the more popular crowdfunding platforms has helped fund over 200,000 projects with more than $5.6 Billion pledged by users.
The entire premise of platforms like Kickstarter is to give you a platform to share you new project and start raising funds from people who like your idea and want to see it come to fruition.
Alex Lu, another recent guest on my podcast, just wrapped up a Kickstarter campaign for his new board game, Dogs Bond. Alex started with a goal of $20k and ended up raising over $30k to fund his board game project. You can still find his Kickstarter campaign page here.
If you want to hear how he managed to successfully hit his target and how to set up a Kickstarter campaign, listen here:
3. Seek Out Angel Investors
An angel investors is someone who provides capital for new small businesses. These individuals have extra cash they are looking to invest and choose to invest in early-stage startups that they feel have good growth potential.
Angel investors will likely seek a higher return on investment than other investing strategies, but it may be a good way to raise the necessary capital to get your project funded quicker.
Here are a few questions to consider and be prepared to answer when reaching out to angel investors:
- Have a clear business plan or strategy
- How much capital are you looking to raise?
- What do you plan to do with the money?
- Do you have detailed projections for the next couple of years?
- How do you plan to market your company? (PR, social media, etc)
- How long with the capital last?
There are companies out there, like Angel Capital Association, that you can utilize to help find angel investors for your new small business.
If you have a more established business, you may even look towards venture capitalists to raise more money for your project.
Before going this route, I would highly recommend that you do some additional research on angel investors and venture capitalists.
4. Ask Your Friends and Family
If angel investors seem like too big of an undertaking, you may want to reach out to friends and family.
When reaching out to friends and family, you may want to consider some of the same questions outlined above.
Clearly state what you plan to do with that money, and identify how and when you plan to repay your friend or family member. You also want to be sure that you choose someone who has a better grasp of business and understands the inherent risks involved with investing on a new business.
Although they may be more willing to support you and your goals, you also don’t want to ruin relationships with the people closest to you. Develop a detailed plan and strategy, and be willing to see it through.
5. Start with a Smaller Project
If none of these options seem like a fit for you, you may need to consider focusing on a smaller project to help raise the necessary capital.
Most successful entrepreneurs and business owners don’t start in the same place they end up. Pursuing one venture will lead to another, and another. Consistently leveraging the small wins is what leads to the big wins.
If you’re looking for some ideas of where to starter, here are 45 ways that can help you raise money.
If you’re brand new to running a business, focusing on smaller projects like these will give you a better sense of how to run a business, as well as put some extra cash in your pocket that can be reinvested into your bigger project.
Start Raising Funds for a New Business
Hopefully this post gives you a better idea of how to raise money to start a business.
If you’re serious about starting a business, the worst thing you can do is refuse to take action.
There are plenty of ways (even more than I’ve listed here) to find funding for your business, but nothing beats experience. Getting started now is the best thing you can do for yourself and your future business.
Sure, you’ll likely fail along the way. But so does every successful entrepreneur. With each failure comes a lesson. You only truly fail if you refuse to learn something from that failure.
How are you planning to fund your next big project?
Let me know by posting down in the comments below!
I am an entrepreneur and adventure enthusiast, looking to break free from the Nine-Five grind. I'll show you what has worked and is currently working for me, as well as what hasn't worked so well.