Capital is very essential at the beginning of every small business. If there is no capital to start a business, there is no way it can be in full operations, but that doesn’t mean that you would trash the business idea.
There are various ways in which every small business can raise capital for their full operations.
1. Get a Job:
You could do something by the side apart from your business (side hustle), to help you raise some money whilst the plan for your business is still ongoing. This would enable you to get money to make ends meet and a to put some things into perspectives.
When you are seeking options on how to get extra investments, there would already be money in the business purse so that the other part that wants to invest won’t be discouraged.
2. Use What You Have:
Before venturing into having a business, there is a high possibility that you would have some capital to start with.
Start with the money that you have and follow the steps on how to build a profitable business from one stage to another, ensure that you are making more profits which would be invested back into the business.
Using your own money involves almost no risks for you and your business. If you have a sound business plan, you would make more profits and invest it back into the business.
This is when you sell your business idea to two or three individuals so that they can partner with your business and invest in the business.
They would talk terms and conditions like percentages about. We would discuss briefly about the kinds partnerships.
a) General Partner:
This is a straightforward type of partnership agreement. These individuals are very involved in the business’s running. They also take responsibilities for the debt incurred by the business. They can also put their assets as collateral when the business seeks outside loans.
b) Limited Partners:
These are the opposite of the general partner, they are not in any way involved in the running of the business, they just give their money as an investment in the business and their assets are not given as collateral when the business wants to take an outside loan.
c) Limited Liability Partner:
This is a partnership where most or some partners have limited liability. They do not take responsibilities for the actions of other partners.
4. Crowd Funding:
This is where a business owner shares his business idea to a group of individuals who, when they pick interests in the business, they put in their funds into the business and expect some percentage from their capital in a period.
This is not very popular in our society yet, and trust in the business and its owners is required to pull this through.
They give a Return of Investment for every amount given at the end of every month, quarter and season, depending on the agreement signed by the business owner and the individuals.
5. Government Grant/Funding:
This is where your business applies for financial help to the government. It could be local government, state government or the federal government.
The government organizes yearly programs to assist small scale business in forms of grants or programs. Your business needs to be registered on all the relevant business bodies to be qualified.
6. Low-interest Loans:
These are loans that have very low interest rates ranging from 6% to 36% annually. , they are a good way to raise capital for your small business.
Where you do not get to pay high interest rates on the loan, which might affect your business. They are also very easy to get with little requirements.
7. Angel Investors:
These could be a friend or a family member or even an acquaintance that you pitch your business to and have some money, they are looking for how to keep the money to get little or no interests on it but do not want to use the bank.
Approaching them to sell your business idea with them so that they can invest in your business is a great idea. Most times they don’t require huge percentages., the only requirement is to return the money when it’s the agreed time.
8. Bank Loans:
You can also raise capital for your business using bank loans. Bank loans are monies taking by an individual from a financial institution with a definite promise to be paid back at an agreed period. The loans come with paying enormous interests and putting down a collateral.
There are basic requirements needed before a financial institution can give your business a loan.
i. They must know what you do in your business and what you want to use the loan for in the business. It would also require you submitting your business plan for scrutiny.
ii. They would require to the number of years you have spent on the business and also how involved you are in the business.
iii. They also want to know the net income and gross income of your business.
iv. They would also need a guarantor to stand in for you and your business.
v. They would require collateral for the loan taken, and a lot of other requirements like your cash flow, your financial bank statement, etc.
9. Turn Your Influence To Economic Resources:
You could also use the influence of people that you know and turn them into economic resources in order to raise capital for your small business.
This is where the type of people you associate with matter. They could have the capital to give or they could have the connection that would raise the capital.
Social currency is very important for every business. More than we know, the relationships that we keep helps us build economic resources. These are ways to raise capital for your small business that would be helpful and aid your business