Financing is one of the most critical success factors for many small businesses. Once you’ve created a great business plan, the next important step for you is finding capital. There are many ways to raise funds for your start-up, but some have tougher eligibility requirements than others.
Here are some of the options you may explore to move your company forward.
1. Succeed with Bootstrapping
With certain types of businesses and industries, you can successfully launch a company without external investment. Instead, you rely on personal finances or savings to fund your venture. If your start-up isn’t capital-intensive, try options like a zero or low-interest APR business credit card. You can eventually attract investment and lenders by demonstrating a strong financial commitment to your ideas.2. Crowdfund Your Start-up
Look for funds among people who believe in your business ideas. Nonetheless, you need to make investors believe in your vision first. You need excellent storytelling skills to paint a clear picture of how you developed your idea into the success achieved so far. Make a compelling video pitch and include product pictures in your presentation. Launch a PR outreach campaign to get the attention of prospective investors.
3. Get a Small Business Loan
Business loans finance 19% of small start-ups in the U.S. This type of financing can help move your venture several steps forward. Whether you need the funds for inventory or business expansion, SBA loans are some of the most viable options for start-ups like yours. The SBA doesn’t issue these loans, however. Instead, the federal agency backs the loans for companies that meet specific eligibility requirements.
4. Seek Financial Help from Friends and Family
Loan default ruins relationships between banks and borrowers. It can hurt family ties, which is why you should approach this option strategically. First, prepare a convincing brief pitch that describes your business idea or plan. Next, decide the type and terms of the loans. Options can include cash for an equity stake in your company or loans you’ll pay back with interest. Finally, pitch to as many friends or relatives as possible. About 10% to 20% of them may lend to you.
5. Look for an Angel Investor
An angel investor may be one or a few wealthy people that find your business idea worth their money. This individual has a net worth of $1 million or more or an annual income of $200,000. They have the resources to take great ideas to the next level. However, they won’t risk their hard-earned cash for the sake of it. You should provide a solid business plan and impress with data.
Did you create a game-changing product that needs external funding to fulfill your vision? If your company is well-developed, you can engage venture capitalists for financial assistance. This group of investors requires a bigger role in the day-to-day management of the companies they fund, so be prepared for this as you approach. Your pitch should feature your business’ financials as company health and profitability are very important to venture capitalists. Also, demonstrate the scalability of your products or business model.
For more information about finding capital for your small business in Ventura County, contact us at Business Forward Ventura County. We offer plenty of resources to help entrepreneurs grow their businesses.