When you own your own small business, it can be difficult to come up with creative strategies and methods to fund your growth and investments. Traditionally, many small businesses acquire funds through commercial loans, speaking with venture capitalists or through personal savings accounts. However, there are several outside-of-the-box tactics that may be utilized when it comes to funding your small business.
- Crowdfunding
Crowdfunding has recently become a popular way to raise funds for your business. By leveraging online platforms like GoFundMe or KickStarter, you can funnel your focus to a large number of potential donors. Whether it be monetary donations, an exchange of goods or services or a combination of both, crowdfunding is widely accepted as an effective way to raise money. Advertise your campaign through online campaigns and social media, and watch the donations roll in.
- Equity-Based Crowdfunding
For entrepreneurs looking to raise serious amounts of money, equity-based crowdfunding may be the perfect strategy. This method involves selling a percentage of ownership or stock in your business to third-party sources. While this strategy can prove highly successful and profitable, it can also come with its own set of challenges and risks. Be sure to do your research, consult with legal advisors and financial advisors to make sure equity-based crowdfunding is right for your business.
- Family and Friends
Many small business owners often overlook the option of funding from family and friends. As they may be more emotionally invested in the success of your business, they may be more likely to financially invest in it as well. This route may be especially effective for more personal investments, such as a car for transportation or furniture for your office.
- Government Grants
The U.S. government offers grants to small businesses for specific reasons and occasions. These grants, although highly competitive and somewhat difficult to acquire, can help you acquire the funds needed to start, operate or even expand your small business. There are a few criteria for acquiring a government grant, such as a clean financial record, solid business plans and a functioning business.
- Merchant Cash Advance
Unlike traditional business loans, a merchant cash advance allows you to take an advance on future sales. This type of funding furnishes you with a lump sum of cash that can help finance operational costs, capital expenses and even marketing efforts. But, there’s a catch: the advance has to be paid back to the lender by a certain predetermined date, typically with an additional one-time fee. Keep these fees in mind when considering the merchant cash advance strategy.
Funding a small business can seem like a daunting task, but with the right strategies, you will put your business in a much better position to succeed. Take your time, consult with professionals and make sure to utilize the resources and options available to you. With the right strategy, you will have the financial strength you need to succeed.