How Do I Raise Finances for a Business?
With jobs hard to come by, many people are finding the inspiration to start their own business.
Most aspects of starting a business are difficult; unless you're loaded, financing it can be one of the hardest parts. Before running yourself ragged trying to find some cash, prepare a financial forecast with small business software so you'll know how much you'll need to stay afloat until the business becomes profitable.
Once you have a financial goal, consider where you'll get the necessary funds:
- First, hit up friends and family for gifts and loans. The loans that come from people you know will often be interest-free. Just make sure to put the terms of the agreement in writing.
- Meet with banks and credit unions, venture capital firms and private investors. Look for a bank that specializes in small business loans. Over the past few years, bank loans have become tougher to secure, so come in with a solid business proposal prepared with the help of accounting software for small business needs.
- Venture capitalists tend to invest in high-potential businesses in their early stages. They make their money by owning equity in businesses that succeed.
- Angel investors are individual investors who provide start-up capital to businesses in exchange for convertible debt or ownership equity. Use your contacts to find angels. They'll be much more likely to consider your proposal if you're a friend of a friend. Set up a face-to-face meeting to present your plan and make sure to practice your proposal. Investors look for people who are confident in themselves and their ideas.
When it comes down to it, you need to figure out whether you'll be better off paying debts or giving away a share of your profits. Either way, you'll have to present your business plan with poise and confidence, so dust off the mirror, grab a video camera, and practice, practice, practice!