How to Raise Capital for Your Start-Up
So, you’ve finally decided on your product and you have a solid business plan in place but before you can make a start you need some capital. How can you get this money without getting yourself into a financial hole? Find out more in this article
So, you’ve finally decided on your product and you have a solid business plan in place but before you can make a start you need some capital. When you have a business, you need to raise your capital for your start-up. Most entrepreneurs find that they underestimate the initial capital they need before producing a realistic business plan, so what can you do to get that top-up you need to take off?
Crowd-Funding
Crowd-funding is a new phenomenon thanks to the communicative power of social media. Crowd-funding essentially consists of sparking the interest of the public using a persuasive plea for charitable donations towards your venture. There are websites dedicated to crowd-funding for example Kickstarter for those looking to invest in certain niches such as the creative industry. Crowd-funding can be incredibly lucrative financially as well as for raising awareness of your business and networking with like-minded people.
Loan
A traditional way of raising money is by visiting a website like gobear.com/my to get a loan. Loans are a great way to get immediate financial help, but they can be risky if you’re not sensible with them. It is crucial that you will be able to afford the repayments so they’re not the best idea if you’re not sure how successful your business is likely to be. It is very important to always meet your repayment dates and amounts otherwise interest rates could increase your repayment amount to the extent that your loan is impossible to repay; causing you to spiral into uncontrollable debt.
Investment
Another traditional way to raise capital for your start-up is by appealing to investors. This can start at home by asking your friends and family if they would be willing to invest in your company. Make sure you treat them with the same respect you would a professional investor for example by running through your business plan with them so that they see you as a credible venture. This way, they’re more likely to invest. You can also appeal to professional investors.
Venture capitalists usually invest in mature companies which already have a good reputation for success however, there are investors that focus on start-ups called Angel Investors. Keep an eye out for angel investor events which are fantastic opportunities to pitch your idea and business plan. The only issue with investors is that you have to pay them back when your company starts to make money, so be sensible with what you can offer them based on realistic forecasting, and how many investors you can afford to have.
Falling short on capital when you’re looking to start a business doesn’t have to mean the end of the road before it has even begun. There are plenty of ways in which you can raise some extra funds for example, setting up a crowd-fund page to persuade the public to help you, taking out an affordable loan, or looking for a professional investor who you then pay back when your business starts to take off. For more business tips, take a look at flippingheck.com.