Since we’re living in such uncertain times, many small businesses are looking for new ways to raise capital. As we look upon new horizons, it’s important to know when to use traditional methods and when to use less conventional methods that will help you achieve your business goals.
Small businesses around the globe are looking for ways to successfully raise capital, especially for those who are just starting a small business.
Starting From Scratch From Home
Statistics convey that nearly 70% of small business owners start their businesses from home. In the early stages of getting a business off the ground, not everyone has the capital to invest in a brick and mortar business, so many have adapted and aim to keep their overhead low by starting their small business from the comfort of their own home.
However, even those who work from home have to invest in technology like computers, effective hardware and software, and even a business telephone line in order to get up and running.
Fundera reports that $17.2 billion is raised on an annual basis via crowdfunding — and that’s just in North America. Crowdfunding is an effective way for businesses of multiple types to raise capital, from tech startups to boutique businesses alike.
The democratization of fundraising now makes it easy for small business owners to reach out to potential donors and investors as a way to get the capital needed to start a new business.
An angel investor is a lot like it might sound. Angel investors are categorized as accredited investors with a net worth of $1 million or more, or someone with an annual income of more than $200,000 who is interested in investing in businesses.
You might get in touch with an angel investor via a networking event, whether executed virtually or in person. You can also research angel investor candidates on your own and draft up a convincing proposal in order to raise interest which could translate into capital for your small business.
Global VC reports show that global venture funding hit $300 billion in 2020, a year where things were quite unstable and uncertain to say the least. Venture capitalists (otherwise known as VCs) will generally invest in more mature companies than, say, an angel investor. In many cases venture capitalists are going to want to help manage operations as well — due to the fact that venture capitalists need to get certain returns for their fund or their firms.
Other Forms of Fundraising
If your small business is in need of capital in order to hit the ground running, one option is to borrow the money from a friend or family member. You can also take out a small business loan if you have good credit standing.
Those who do not have great credit can look to the sale of unwanted items, such as equipment, vehicles, or even take out a reverse mortgage on an owned piece of property. Title loans are also an option for those who need capital to start their business, usually in a small amount, depending on the vehicle in question.
Depending on how much capital you need to start your small business, we hope some of this input helps you in your efforts. Stay focused, stay positive, and put painstaking effort into making your business grow once you have the capital to start operations.