How to Raise Funding For A Small Business

You have your business idea ready on paper and you have researched it well, you’ve come up with a marketing strategy and you are raring to go. Just one problem…where’s all the money going to come from for the equipment that you need, the stock, the staff and so on?

If you’re lucky, you will have saved this money up and you can fund yourself. However, very often, small business ideas and ventures arise at times when you don’t have the capital to be able to invest. You might find someone to invest in your idea such as a friend or a colleague but, chances are, you might not. So how are you going to get the money?

There are all kinds of ways in which to fund a new business idea. Identifying the right finance option for your own venture is important. To attract funding of any type, you will need a thorough business plan which will come under much scrutiny. As part of any funding agreement, you will also be audited and there will be requirements for you to fulfil, such as cash flow levels and so on. You will also need to make sure that your credit rating is kept in order.

Whether you need to acquire assets, hire premises, pay for marketing, pay for staff or need, you can apply for funding, grants and loans from various sources.

You could go to the bank and ask your lovely bank manager to lend you the money in a loan agreement, with a fixed term payment. Your credit ratings will be taken into consideration and he will want to see your business plan – fair enough if he’s going to lend you the money; he needs to know whether your business will grow sufficiently to be able to pay it back. Whilst you are there, ask him if he can extend and increase an overdraft agreement on your existing bank account so that you have a buffer in which to fall.

Of course you might like to use a credit card, or more than one. Apply for a card which is offering a 0% interest rate for a fixed period and then change it when that period is over – keep doing this for as long as you can so that you are borrowing money but not actually having to pay interest back on it. Whilst an option, it is probably not the best option for financing a small business as you may run up huge debts that you are not able to afford.

There are grants out there for which you can apply that do not need to be paid back. However, the competition for these is fierce, with a strict application process and they can be quite lengthy affairs. It is worth looking into but you should also have another source from which to call upon in case the funds run out. There is also government support available for many businesses and so check with your own local governments’ websites.

Outsourcing part of your business to a third party might be a way to reduce your costs. As a start-up, you might be entitled to non-financial support in the form of free training session, business advice, marketing tools, networking events and so on. Utilise whatever free resources you can get your hands on! You may have shares to sell, other assets to sell or debts which you could restructure.

There are many ways in which to fund your business but remember to research them all well and not to put all your eggs into one basket so that you are spreading the risk.

Copyright © Peter Moore 2009 - Co-Founder of EzWeb123.com