Money can be tight when a business first opens its doors. Most businesses start out with just enough to get off the ground hoping that their profits are solid enough during the first quarter to give them a boost for the next few months. The problem is that it leaves them strapped and out of resources if an emergency happens. Learning how to raise money for a business is important so you at least have a small cushion to fall back on.
Invest in Yourself
If you find yourself in quick need of cash, use some of your savings or cash in a bond or two if you have them. If you are going to invest in anything, why not invest in yourself. Putting money into your own company is a better investment than putting it in the stock market where you have no idea how hard a company is working to succeed. Invest in your future and you will reap the rewards for many years to come.
Find Strategic Partners Early
Find partners that will work with you when it comes to advancing lines of credit or exchanging services. If you have a product or service you can trade with another business so that no money changes hands, it’s a win/win for both of you. You each get something you need without having to make room for it in an already tight budget. Building a trade-based relationship with other strategic business partners will do both of you good when hard times hit and you don’t have the extra money to pay for a specific service or product.
Bootstrapping is one of the oldest forms of funding you will ever use. Sharing office space or large pieces of equipment with another company is a great way to make sure the bills are paid. It also allows you to share ideas and improve the functionality of both businesses. Another form of bootstrapping is to negotiate the terms and fees with each company you work with.
Look for Angel Investors
Angel investors are one of the best sources of additional funding you will ever find. Along with the financial help they offer, angel investors will also give you advice and guide you through some of the most difficult periods you may face. Their years of experience will allow them to give you a new perspective and may show you a better way of handling certain problems. An angel investor will often provide you with guidance that is more valuable than money.
Apply for a Manageable Line of Credit
Applying for a manageable line of credit will give you the working credit you need when you need it most. Having working capital at your disposal will allow you to keep up with your bills when your business is slow. The thing about having an available line of credit is to only use what you need. Take only what you will be able to pay back in a few months. This will keep you from becoming overextended and adding to your financial difficulties.
There are times when having working capital is a must. The key is knowing how to keep your line of credit manageable. Talk to your lender and have them discuss your options. Know what you need and know what you can afford. Find a happy medium and you will be able to fund your business wisely and efficiently. Knowing how to raise money for a business will help you get ahead without causing you to get behind.