How to Raise Capital for Your Business
There will always be a need to start new companies and enterprises therefore the topic on how to raise capital for a new start-up will remain relevant for generations. With the rise of the financial technology mindset worldwide, the demand for easier and faster processes is on a high. Entrepreneurs have seized this opportunity to create new companies to satisfy these increasing demands.
One of the characteristics of a start-up business is that they are usually very expensive to initiate. The websites you need to build, the publicity et cetera as a result of this, over 80% of entrepreneurs seek better and better means of raising the capital needed to fund their start-ups. This is one out of the many reasons start-ups don’t live past the first 12 months of their existence. Some of the funding options entrepreneurs explore are family, loans, venture capitalists, and crowdfunding.
In this write-up, we will be canvassing through the most effective ways of raising the necessary capital to fund your business in the shortest time possible.
Effective Ways of Raising Capital for Your Business
Have you done your homework first?. This might seem an odd question concerning the financial topic being discussed. But as trivial as that sounds, this is one of the major stress relievers during the search for an investor. This particular move will save you a whole lot of stress.
It is one thing to fill your list with a thousand and one potential investors/partners, and it’s another thing to narrow down your search to investors within your business or idea jurisdiction. With the former, you operate on just numbers and luck. With the latter, you work with luck and wisdom which quickly pays higher and fatter dividends.
A partner or investor in the same industry as you would not only buy into the brilliant business idea you must have curated, but will also give you guidelines on how to scale through in your chosen field, having been in the game longer.
Narrow down your investor/ partnership search with a few questions like; What industry does my business idea belong to? Where can I find investors in this industry? Find out how your predecessors got the capital they used in starting their own companies. Find out the category of people, interested in what you are selling.
The term pitching can mean a whole lot of things in different contexts, but in line with our topic, pitching is a strategic discussion or presentation designed to sell an idea to potential investors or partners. We mentioned in the introduction that entrepreneurs seek external help in raising capital, these investors will most likely seek a return on their investment. This return in investment should be the make-up of your pitch to properly sell your business.
Pitching can be mentally stressful but when successful can pay handsome dividends and set your business on its way to success.
Pitching can be done physically, via social media, or email marketing. It is no news that the world has gone digital, therefore some of the most effective pitches are done on social media in recent times. The question now is how well can you sell your business online?
Highlighted below are some of the effective ways of spicing up your pitch to get the desired result.
- Sell your idea first to yourself
- Identify your investor’s needs and leverage on that
- Make it short and engaging
- Tell a good story. Aim to inspire
- Sense of humor sells
If you have checked these few points on your pitching strategy, then you are well on your way to effectively selling your idea.
Building a social media presence
Well, this might sound very awkward when we consider the subject matter of this piece. In this era, a strong social media presence is a sign of strength. It’s easier to sell, convince, convert, and pitch to an already trusting and engaging audience than without.
The idea of a strong social media audience is a potential goldmine waiting to be explored in this age. With a proper strategy, social media presence can be easily converted into cash.
Creating the right content, engaging followers, staying active, and being portraying the company most socially are good tips for making this work in the present and long time.
Forming Business Partnerships
Although one has to be very careful about creating partnerships just for the sole aim of raising funds. Some people have the access to capital and resources needed to successfully run a business.
Teaming up with one of such persons is not a bad idea. It is however very important that such partners understand the values of the company.
From the onset, the policies, rules, the mode of share of equity, and any other business agreement that needs to be settled must be put down in writing to avoid conflict in the future.
There should also be a solid understanding that will create a long-lasting relationship between the business owners.
Grants are free money. Well, not exactly free money factoring the terms and conditions that come with some grants. Finding suitable grants can be one of the surest ways of securing funds for one’s startup.
There are so many grants set up for startups by the federal government, state government, private organizations, and high-class individuals.
To win grants, however, you must have a convincing business plan drafted. In some cases, pitch decks can work the truth as well. The key to winning grants is just finding grants that align with the organization’s values.
Raising capital for a new company can be quite frustrating and discouraging especially after the first few months of trying. An entrepreneur should always be on the lookout for grants that fit his company. Wealthy partners can also be discussed to reach an agreement about how the company would achieve its goals and objectives without laying too much emphasis on profit.