Raising Capital for Your Small Business
As the old saying goes, “You have to spend money to make money” and that is no less true when it comes to small businesses. Every year, small business owners venture out to find funding to make their dreams come true, but this can get difficult. Few people know this better than David Geithner, who is currently overseeing the capital raising initiative with ReactiveCore.
However, with some creativity, you can find various ways to fund your small business and get your foot in the door as a new business owner.
Regulated by the FDC, crowdfunding is a safe and effective way to raise capital for your small business. You may have heard of websites such as “GoFundMe” or “Indiegogo”, which are both crowdfunding websites. These sites enable individual investors to select a small business that they believe will be financially successful, and invest in it.
While there are regulations on the amount that an individual can invest, crowdfunding works by utilizing multiple investors to increase the capital raised throughout the campaign.
- Applying for a Small Business Administration loan
A lot of small business owners try to avoid this, but every year thousands turn to lenders to help fund their small business (and many are successful and are able to grow their business with the help of traditional financial institutions). That being said, banks tend to use a lot of discretion and have more requirements than private investors.
Most financial institutions require you to have been in business for a minimum of two years, at least $100,000 in revenue, and good credit. Keep in mind that every lender is different, so you should speak to a few before you start setting anything in stone.
- Angel Investors
Angel investors are individuals who have the money needed (typically they will have a net worth of over 1 million dollars) to invest in a small business that they believe will succeed. Much like financial institutions, they want to see a solid business plan and you will want to pitch your heart out in order to really grab their attention.
If you’re looking for an angel investor, check out this website that puts small business owners in touch with potential angel investors.
While this likely won’t work well if your small business start-up requires significant cash, it’s excellent for entrepreneurs who don’t require too much upfront investment. You can use a credit card or money you’ve saved over time in order to get your business rolling. And the best part of it is, if you need money down the road, you are much more appealing to potential investors. This is because if people see that you’re willing to put your own money into something, you likely have a solid plan and intentions to keep your business growing over time.
- Venture Capital
As with any type of funding, there are both pros and cons to utilizing venture capital. One downside that a lot of small business owners are leery of is that these investors typically want to have equity in the company, which means they could get to be part of the decision-making.
The upside? Many companies who do not qualify for an SBA loan (i.e. companies that have been operating for less than two years) are able to get funding from venture capital financing. No matter what route you decide to take to get your small business off the ground, make sure you keep working hard, exploring financial options, and keep your company’s vision strong.