The Easy Way to Raise Capital for Your Small Business

For most of us with dreams and ideas for starting our very own small business, there is always one barrier that stops us from entering the brave new world: capital, or lack thereof.

In spite of this, many small business (and big businesses alike) start off with little funding. The budding entrepreneur’s secret to starting a small business without large capital investment?

For most of us with dreams and ideas for starting our very own small business, there is always one barrier that stops us from entering the brave new world: capital, or lack thereof.

In spite of this, many small business (and big businesses alike) start off with little funding. The budding entrepreneur’s secret to starting a small business without large capital investment?

First off, many small business owners start by delving into their own pockets: which means putting money away for their cause while they are fully employed – and starting out their business while fully employed. Not only is this a good idea because it means you get to start your business relatively debt-free, or debt-light, it also means that if your idea sinks when it gets to market, you still have your full-time job to fall back on.

A good business plan on the other hand, can also be the key to showing lenders your small business potential – and open up their wallets. However this is a hard thing to do for small businesses unless you have a close and personal relationship with an investor – or what you are doing, strongly appeals to the investor’s interest and values.   Your business plan will also help you seek capital through business loans from your local bank.

However, banks are strict when it comes to small business lending – and you might need a property or car to back the loan up, as well as maintained a good credit record to qualify for a business loan. Don’t forget, and assuming your personal credit is clear, you can always take up a credit card or personal loan instead.

You’ll be able to kick your business off, and try again with the bank once you’ve got sales and order figures to show. It’s somewhat a chicken or the egg situation, but whichever way works to start up your small business, can’t hurt. Because let’s face it, the days of angel investors and readily available capital are over – and if you want to start a small business these days, it has to be off the back of your own efforts.

However, more and more small business are working together to help each other by offering longer credit terms and flexible business arrangements to each other. So start making contacts in your desired industry and find out exactly how much you need to start your business up-front, and what you can get away with paying later.

Another great way to increase the amount of capital at your disposal is to take on a partner or co-founder. Having a business partner can be tough on those entrepreneurs who pride themselves on being independent of others, but there are some big advantages that come with having a co-founder. In a recent article, Michael Fertik outlined how a trustworthy partner can complement your strengths and increase the effectiveness of your business through your combined leadership.

You might be surprised to find out, you didn’t need as The next best place to start raising capital for your small business is look to the ones who are closest to you. That is, your friends and family. But borrower beware, this is risky and strenuous on relationships. So make realistic promises on repayment time frames and interest.