How to raise capital for your business

If you're one of those entrepreneurs who like to work smarter then this is the article for you.  

It's time to make your own money tree by sifting through the different ways you can get funding for your business. 

Here are the 6 different ways to raise money for your business:

1. Bootstrapping your business 

It's definitely feasible to fund your own venture, provided that your business isn't in an industry that requires too much startup capital. 

If you don't have the savings in the bank to run your operation, you can get a low interest APR business credit card which will give you the opportunity to borrow cash from the bank without incurring any interest. 

Remember that investing your own money into the business will probably make investors more willing to partner with you in the long run. 

2. Start a crowdfunding campaign 

Believe it or not but crowdfunding success stories fill the cup.

It's all about having the right product and the right pitch.

Crowdfunding may open up the door for you to connect with like-minded people you wouldn't normally be able to connect with. You can gauge whether or not people are into your product by being able to see if it resonates with them, which will help you improve your product and your pitch as well as help you to raise money for your business.  

3. Apply for a loan

Even though technology is creating new and exciting ways of raising capital, traditional financing avenues remain the primary way of generating capital for your small business. 

Before you apply for a loan, make sure to have all of your loan documents ready. You'll be asked to show things like bank statements, tax returns, profit and loss statements and balance sheets. In rare cases, your personal information may be asked for as well. 

4. Asking friends and family 

A more viable option for many to raise capital may be asking your friends and family. It is however advised that you choose a friend or family member with some business skills and that you narrow your list from where you choose from to family and friends who trust in you and have faith that your business will succeed. 

Remember to have a sound business plan and direction and to be realistic about how much money is needed. 

5. Find an angel investor 

Angel investors have a net worth exceeding R 15 million who typically operate alone but sometimes team up with other angel investors in order to form a fund. Angel investors are the perfect source of capital for your business.

But you'll need a really solid business plan as well as a really good pitch. You have to grab their attention with enthusiasm and passion for your business.

6.Get investment from venture capitalists  

Sequoia, one of the most successful venture capitalist firms states that “you need to convey the main reasons why an investor should love your business in the first 5 minutes.”

Sequoia partners stress that you can do this in as little as three simple steps: explain what's changed, explain what you do and explain the facts. 

In conclusion 

The key is to have as many options as possible to finance your business so that you don't end up being disappointed if one of them doesn't work. In order to grow your own money tree, you'll need to have diligence by being resourceful and smart about the way in which you decide to go about things.

P.S. Here are some of our favourite business that help SMEs get the capital they need: Lulalend, Business Fuel and Merchant Capital.