Asking the right person for business funding
When starting a business, raising capital can be quite a task, especially these days, when the banks are not lending out as generously as they used to. Now what’s the next best thing on how to raise money for your new business.
The first thing you can do is turn to your friends and family, as for sure you can always relay on your friends and family, as most of the time they will be there for you in the times of need, also one of the good things is its not formal, you do not need to come up with a business plan or go into all the nitty gritty stuff. Just have a casual chat with your friends and family, and if your idea is good, there is no reason why they wouldn’t help. It may not be financially but they will always give a helping hand, in which ever form convenient.
This is what my cousin recently did very cleverly. He called all of his cousins and said he is treating everyone at the desert parlour. When I got his call I thought he’s going to announce something special. Hence everyone was curious why he was treating. We all took turns to guess the reason, but no one got it right.
At the end, he mentioned that he is starting a new cakes business, and wants to rent a shop front for his business, for which he requires some funding. He agreed to pay us all back after couple of months, but things worked out even better for him, as we all gave him what we could all afford as a gift, without him having the burden to pay us back…..He was loving it 🙂
Nevertheless, what you can see here, is if you Don’t Ask, You Don’t Get.
In business one of the qualities you need to learn is not to be shy, or held back, if you are, you will find yourself being left behind, your competitors, team members, and others around you will always be ahead of your game. At the end of the day you do not have nothing to lose, and by asking you can only win.
Couple of methods for raising capital
1. Loans – Taking out a loan to invest in your business can be a sensible option, if you can get a loan to invest in your business, it can take a lot of stress of you. The trick is getting passed or accepted for the loan. If you go to your bank and they say “no” never mind, do not lose hope, go to another, and another, you will find one bank or a building society that will assist you in getting a loan for your new start-up. Never lose hope.
When Walt Disney wanted a loan for his business, he went from bank to bank, and they all thought he was mad, going make cartoon character, but he kept going until he found a bank that did buy into his idea, and gave the funding he needed. Now imagine if he didn’t have that drive, and gave up after the 5th 6th or 10th bank, we wouldn’t have had Disney World :(.
2. Grants – Applying for a grant can help you boost especially in the early days, there are many organisations that offer grants or such schemes for new start-up companies, all you need to do is get in touch with such organisations, and pitch your idea to them. This method can be slightly more difficult than getting a loan from the bank. In the UK you can also check out Business Links website for grant advise.
3. Credit Cards: By putting your start-up expense on your credit card, you are buying yourself some time, as most credit cards offer 30, 60 or even 90 days free credit, so you do not need to pay them for a certain period of time, which will allow you to spend time building your business. Also this option will also allow you to pay minimum balance back, which is great if you have 0% interest credit card. You can slowly pay of your credit card loan, without any stress of paying extra.
Business Angles: Most of us have head the famous TV program Dragons Den, this is what business angles are, wealthy and successful business owners, that you can pitch your business idea too, they have experience in business, and at times maybe even in what you are looking to do. If they like the idea, and can see a return, they will offer to invest in your business in return for a percentage share in the business or a repayment of the loan with an interest.
Usually if you have a business angel invest with you, you also get their expertise, experience, knowledge, contacts and help to an extent, as they want to see you succeed, because if you succeed they will also make money from their investment.
How did I raise capital for my business
When I started, to be honest I didn’t have much capital, and my credit score was not too good at that time as I had a bunch of credit cards to pay off, so going to the bank was not an option, so I got myself a day job, and saved money until I had enough to register a company, buy a domain, and build my website. At the same time, I also started studding things for my business that I can do myself, rather than employing someone. Every time I made a sale the profit I reinvested back into the business, and slowly over time, I started to see my business grow, and get to where I wanted it. There’s still allot of work to do, which there always is, but if I didn’t re invest and re invest, the business would have never grown. You always need some capital backing.
This process is extremely long, and needs a lot of patience, but it worked for me.
How did you raise capital for you business? Share your experience with me in the comments below.
Image from: SXC