Most people who have a great business idea do little about it, even if they research the idea a little deeper and find that it has an excellent chance of doing well. They fail to launch not because they are fickle, timid, or indecisive, but because they don’t know where to get the money they need to start their business.
Often a great business idea and a well-thought-out business plan aren’t enough. Many businesses can’t start on a shoestring budget because they require office space, a multi-talented technical team, and an online business infrastructure. Moreover, it sometimes takes a little time for the sales to start coming in.
Before the financial crash of 2007, it might have been possible to get a small business loan, but since then banks have become nervous about putting their faith in new, untested business ideas launched by new entrepreneurs.
Still, the situation isn’t entirely hopeless. There is still a way for entrepreneurs to get the funding they need to start a business venture, whether it’s based on a proven business model, like opening up an eatery, or a novel business idea, like inventing a new business app.
3 Ways to Raise the Money You Need
You can raise the money you need by starting a fundraising campaign, bootstrapping your company, or asking family and friends.
1. Start a fundraising campaign.
An increasingly popular way of raising money is by launching a fundraising campaign. There are many interesting ways to organize a fundraiser. One idea is to start selling fundraising bricks. You would honor your donors by engraving their names on bricks using a using unique patented laser engraving process.
Another idea is to use a crowd-funding raising site, which will give you a platform to create a digital marketing campaign to raise money from many small supporters.
2. Bootstrap your company.
If you’re starting your business with some partners, you could bootstrap the funds you need. Essentially, everyone would scrape together their personal funds to contribute. For instance, some partners might be able to contribute some money from their saving accounts while others might be able to contribute by liquidating assets.
The upside is that all partners will be highly motivated to ensure that the enterprise is a success because they have some skin in the game. The downside, of course, is that not all partners may be in a position to make a contribution because they simply don’t have the personal resources.
3. Ask family and friends.
Although it can be somewhat embarrassing asking family and friends, many businesses have launched in this way. This, for example, is how Harry Wayne Huizenga, a billionaire who is often considered one of the greatest entrepreneurs in the history of American business, started in business. According to an article about Huizenga in Entrepreneur: “In 1962, at the age of 25, Huizenga started the Southern Sanitation Service by borrowing $5,000 from his father and coaxing a local trash hauler in Fort Lauderdale, Florida, into selling him a used truck and a few accounts.”
From these humble beginnings, Huizinga then went on to found no less than 3 Fortune 500 corporations and owning 3 big league professional sports franchises.
Before asking family and friends for money, however, you need to prepare a comprehensive briefing. This way your request for money is backed up by an explanation about what it is that you’re planning to sell, how much you’re planning to charge, how you will be able to make money, and why your business idea has a good chance of being successful. Also, be clear whether you’re asking for a donation or a loan. If it’s a donation, family and friends will be aware that they may not get any money back, and if it’s a loan, give them some idea of how soon they can get their money back and how much profit it might be reasonable to expect.
In closing, it’s important to note that these are just a few sample ideas on how you can raise money. There are many more. For instance, you might also be able to raise money by using alternative lenders, getting support from the Small Business Administration, finding an angel investor, or getting backing from a venture capital firm.