If you're eyeing up exciting new projects for your small business, then you'll need to raise the necessary capital, which is often the biggest problem standing between your business and its next step. Here are 4 ways to raise money for new projects without breaking the bank.....
1. Crowdfunding
Crowdfunding means that you take your business idea to a platform such as Kickstarter, GoFundMe or IndieGoGo. On these platforms, you can present your project and receive pledges from backers. It's a great way to get your project funded by the public, and you won't need to worry about paying back the money.
If it sounds like it's too good to be true, then that's because it often is. Crowdfunding is far from easy - people don't just hand out money for free. You'll need to create a convincing pitch and some tangible rewards for backers in order to get them interested in your project. It takes a lot of hard work, dedication and patience, and in some cases, the time that it costs you to create a crowdfunding campaign may prove to be more expensive than traditional forms of raising capital.
2. Bank loans
Another way to fund your project is through bank loans or business lines of credit. This involves applying for a loan from a bank and either having the money paid directly to you, or having it transferred into an escrow account that is managed by the bank.
The downside of this method is that if you don't have a good credit score or track record, it may be difficult for you to get approved for a loan. Additionally, if you're unable to make repayments on time, the bank may take legal action against you.
If you do opt for this method, make sure that you have a shrewd accountant or financial advisor by your side who can help you manage the loan and steer you away from any risks.
3. Angel investors
If you have a great business idea that needs funding, then angel investors can be a good bet. Angel investors are wealthy individuals who are willing to invest in promising business ventures. They typically require a return on their investment, and many will only be interested if they believe that your project has the potential to make a whole lot of money – think Dragon’s Den!
Angel investors can provide you with both capital and advice, so it can be a great way to get the resources you need, as well as gain valuable insight into how to make your project successful. However, it's important to understand the risks involved, and make sure that you have a clear exit strategy in case things don't go as planned.
4. Friends and relatives
The last method of raising capital may be the easiest but in terms of your personal life, it's also probably the riskiest. Taking money from your friends and family can put a strain on relationships, especially if things don't go as planned.
That said, it's not impossible. If you have a good relationship with your loved ones and can convince them that your project is worth investing in, then it could be a great way to get the funds you need.
Final thoughts
No matter which method you choose, it's important to do your research, understand all of the risks and make sure that you have a plan in place for how to repay the money, if necessary. With the right strategy, it's possible to raise capital for your next big project without breaking the bank.
