Every small business needs capital, but raising it in the most efficient way possible can be tricky. Here are some tips to keep in mind.
1. Be Realistic About How Much Money You Need
Many small businesses fail due to lack of capital. Even if your startup business only needs basic equipment and a handful of employees, these are likely to add up to a significant amount of funding. Don’t underestimate how much you need. In order to have a really clear sense of how much money is required to run your business, plan exactly what outlays you’ll need before your company can open its doors. This can be a time-consuming process, but it will be beneficial in the long run.
2. Know the Value of Your Company
Understanding how much your company is worth is helpful for determining the costs of future capital that your business may need. Think about what your company is worth today, what it will be worth in the future, and what it will take to reach that future value.
3. Consider Debt Funding
Venture capital investments are sexy, but they often are not the best option for entrepreneurs. The screening process is brutal, and venture capital firms may ask for so much equity that the founder loses control. Instead, look for traditional bank loans. As the economy has improved, approval rates are rising.
4. Don’t Give Up
Women entrepreneurs tend to face more obstacles in raising startup capital than their male counterparts do, but this is not a reason to give up on your quest for capital. Biz2Credit can help! On Thursday, March 6, from 3:00 – 4:00 p.m. ET, Biz2Credit will present The Venus and Mars of Small Business Finance, a webinar focusing on topics such as business formation, raising capital, and other small business topics. Free registration here.