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Posted by on Feb 28, 2014 in Small Business | 0 comments

5 Ways to Raise Capital for a Business Idea

5 Ways to Raise Capital for a Business Idea

One of the most daunting challenges that entrepreneurs and start-up businesses face is sourcing that initial investment. Money makes the world go round and without it, you simply won’t be able to turn your dream into a reality. Ron Bakir is the founder and CEO of HomeCorp, a large Australian property development company. He was also a self-made businessman by the age of 17. Taking a leaf out of his book, here are five ways to raise capital for your business idea.

1. Personal Assets

More often than not, aspiring business owners will source much of their initial investment from their personal funds and belongings. This could mean having a garage sale, auctioning off expensive items or forfeiting that European holiday you’d been saving for. You can’t expect to succeed without making a sacrifice or taking a risk; Ron Bakir made the move from Sydney to the Gold Coast with only $120 in his pocket and the goal of creating a mobile phone shop!

2. Business Loans

Another common method of raising capital is to take out a business loan with a bank. This can be quite difficult to do, depending on the institution, so give yourself the best chance possible by preparing a detailed business plan and appearing professional, although friendly. Be sure to research the offerings of several different banks and credit unions in order to get the most suitable loan for you.

3. Credit Cards

While it is never wise to rely too heavily on credit cards, don’t discount them as a source for capital. Play it safe by using them in conjunction with your personal assets, loans etc. and keep a sharp eye on repayment deadlines. Do not use a credit card if you are not positive that you can pay off your debt as interest rates are often terribly high. Credit cards are also a good option if you need funds quickly.

4. Your Network

Depending on the people in your network, borrowing money from friends or family can be just as risky as using credit cards. Some people have a strict policy of not mixing business with their personal life but others may be more open-minded. To avoid any misunderstanding or resentment, be realistic with yourself and your new investor about when the loan will be repaid, the chances of it actually being repaid and whether you are expected to pay any interest.

5. Crowdfunding

A relatively new, revolutionary way to gain capital for your business is to utilise online funding platforms. Crowdfunding sites such as Kickstarter and Indiegogo feature thousands of projects that are backed by contributors donating money. Contributors can either be friends, family members or complete strangers who genuinely believe in your business idea.

In reality, there are many ways to obtain that initial investment, so stay positive and think outside the box. Have you already been through this process? What methods did you use? Share your story or thoughts by commenting in the box below.

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