You’ve got a brilliant business idea, and you’re impatient to turn it into reality. There’s one glitch — a lack of funds. How can you raise some serious cash fast?
1. Use Your Contacts
Most ambitious entrepreneurs are determined to go it alone from day one. But there’s no shame in asking for a little help to get started. Consider asking friends and family for a short-term loan. If this sits uncomfortably with you, offer them something in return, such as a slice of the first business profits or a year of free cat sitting!
Someone you know could put you in touch with a potential partner who might invest in the business and help get things up and running. A significant benefit of this kind of borrowing is there are unlikely to be substantial interest rates or penalties for early repayment.
IMAGE: PEXELS
2. Sell Your House To A Cash Buyer
If you need to raise serious money and own a property, selling to a cash buyer could release some much-needed capital fast. Ah, but aren’t cash buyers hard to come by, and doesn’t it take months or even years to complete on a house sale in the UK? Not necessarily so.
A house buying service will make a cash offer for your home, regardless of its state of repair. Once a firm offer is agreed, the proceeds of the sale could be in your bank account within seven days. Of course, these companies need to make a profit by selling on your property — so the cash offer will be less than its market value.
However, if you need the money quickly and have a fantastic money-making business idea, the ready availability of a significant amount of cash may be more important than getting top dollar for your property.
Factor in all the fees you won’t have to pay — for an estate agent, mortgage repayments, and house repairs — and the difference in return between using such a service and going the traditional home selling route rapidly diminishes.
3. Find An Angel Investor
An angel investor, otherwise known as a private investor or seed investor, is a high net worth individual who commits to financial investment in a startup. You may be lucky enough to find a philanthropist willing to help out of the kindness of their heart, but in general, an angel investor will expect something in return for their money. A typical arrangement is for the investor to receive ownership equity in the company in return for the initial seed money provided.
Angel investors are an excellent choice for entrepreneurs who lack the capital needed to start their business and are struggling to secure a business loan. Angel investors do not require the same reassurances as high-street lenders, and they are generally risk-takers with money to burn. Additionally, the money is not a loan and does not need repaying.
However, an angel investor who is using their own money and now has a stake in your business may well have high expectations regarding their return on investment — and they might want a say in how you run things. If you’re okay with losing a degree of control and are lucky enough to find an investor, this can be an excellent way to get started with the idea that appears too risky to other potential funders.
4. Crowdfunding
Crowdfunding has become an increasingly popular way for individuals to raise money for all types of causes and business ventures. It involves setting up a profile that outlines the project or business idea. Via the online platform, you can then ask people to contribute a small sum of money towards the overall target sum.
Perhaps surprisingly, there are plenty of people who will donate £5 or £10 simply because they believe in the cause or idea. However, many crowdfunders offer rewards that scale with the size of the donation. For money-making ventures, people are less likely to donate without expecting something in return.
This option is a good choice if you’re reluctant to give up company equity, as you would with an angel investor, or if you have no assets to sell. There are plenty of success stories where startups have raised considerable sums to make their business dreams a reality.
In 2016, Crowdcube became the first UK-based crowdfunding website to raise £200m for startups and small businesses. Suguru, a company selling moldable glue, raised over 300 percent of its funding goal in 2015 via crowdfunding, and the product is now used in 160 countries.
5. Try Your Luck At Business Competitions
Business competitions are certainly not a sure-fire way to raise funds, but entering business competitions that require you to pitch your idea can be rewarding in multiple ways. Sure, if you win, you secure a healthy investment or a cash prize, which is just what you need.
But even if you walk away without any prize money, you’ll have learned something about your product or service, the market and how to sell your idea. Contests are a fantastic learning experience that can help entrepreneurs create an effective business plan and test the waters with their products.
If you didn’t win, why didn’t you? Do you need to perfect your presentation skills — or have you targeted the wrong audience? Does the product or the business model need changes? Contests also give you — as the face of the business and its products — valuable publicity, which could help with other fundraising efforts, such as crowdfunding.
Don’t let a lack of funds stop you from pursuing a business dream. There are plenty of ways to raise some startup money. Carefully consider how much you need to get up and to run. It may be possible to test the waters with a simple website that costs next to nothing to create.
If you really do need a cash injection, consider selling your assets by making a quick house sale, or get creative with a crowdfunding campaign. These options are not mutually exclusive, so why not give them all a try!
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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