Whether you have a physical product that you are trying to sell or a range of services, you have a great idea for a business but you only have one problem – you don’t have the money to actually get that business started and off the ground. Not to worry, all you have to do is start raising capital. Capital raising will involve selling yourself to others with deep pockets. It’s not going to be easy and you will have to put yourself and your ideas out there, but if you happen to meet the right people and those people have deep enough pockets, you might just see your dream business come to fruition.
Friends and Family
The first step in raising capital is to ask your friends and family to pitch in and help out. After all, most successful people spend money on their friends and family anyway, so helping you get your business off the ground is helping them simultaneously. You can use that in your pitch if you want. Before you start asking friends and family to loan you money or invest in your business, you should create a business plan. This plan should include your mission statement, information about the market – including your customers and any competition – and a yearly estimate of all cash flow in and out of your new venture. This will allow potential investors, even if those investors consist of your aunt and best friend from third grade, to determine if your idea has merit, and if they’re likely to see a return on any money they throw in.
If your friends and family throw their cash into the hat, great; if not, your next step is to visit your local bank or credit union. Even if you do obtain funds from those closest to you, you’ll still want to find funding from other sources, just to increase your chances of success. A bank loan is the logical next step from familiar funding; and by shopping bank-to-bank, you should be able to find competitive interest rates.
While your pitch for friend-and-family capital raising may have been informal, the pitch you give to a bank manager will need to be very professional and planned out to a T. That includes creating the aforementioned business plan.
A bank manager will want to see your business plan and will also want you – as the potential business owner – and any partners you may have, to explain how and why your business makes sense. More to-the-point, the business manager will want to know how you intend to make money and sustain that success so that the bank makes money on your interest payments. You can liken the bank manager interview to a job interview. Put your best foot forward, put on your Sunday best and get ready to sell yourself and your dream.
Crowd Funding and Social Media
You will eventually want to take your capital raising efforts into the virtual world, where you can raise capital from all over the physical planet without leaving your seat (unless you have a mobile device, of course). Using sites like Kickstarter and Fund Anything, you can make your pitch and ask for small-to-medium-to-large donations while offering rewards to those who participate. For example, if you are making a movie that you want to crowd source online, you can try offering a valued place in your movie’s credits for all those who contribute a substantial amount.
Other avenues that are great for raising capital include placing ads in trade and entrepreneurial magazines and pitching celebrity or angel investors.
You can start off small or you can dream big, and you now have several options to pursue. It would be a good idea to have a sample ready of any products or services that you plan to offer, such as a prototype of your latest product or a physical copy of your latest whitepaper. This will show that you are serious about raising capital, and it will hopefully impress your potential investors.
The first step is to develop your business plan, then start talking to the ones you know and love. Next, head over to your local bank, and try several banks to cover all of your bases. Then put your business idea on crowd funding sites and on social media sites and any other venues you’d like to pursue. Hopefully you will succeed in raising capital so that you can get your business started, off the ground and achieving the success you desire.