How to raise enough money to start up a business has been the biggest challenge of most young entrepreneurs. Most young businesses also need funds to cover running cost. This is because most young businesses yield little or no profit at the early stage. Therefore if not properly handled, it will collapse. So another challenge is how to save money for young businesses, especially the small scale ones. This article will reveal the easiest and most efficient ways to raise money for business start ups. You will also learn how to save money while running a young, small scale business.
Financial management is one of the key success tools of any business, both online and offline. A business suffers whenever the manager lacks adequate knowledge to manage available funds. No matter how little a business capital might be, with an in-depth knowledge of where and when to invest, the business will grow and become successful. Learn some financial management tips every young entrepreneur needs to know.
Ways to Raise Funds for Business Start Up
Sell Your Personal Assets
This is the fastest way to raise money for a new business venture because there are not much protocols like some other options. If you have real estates or stocks, you can sell them to raise funds for your new business.
Find a Good Business Incubator
These are organizations that help young entrepreneurs who have nice business ideas. They provide assistance, both morally and financially. To benefit from the business incubator program, you must be able to convince the organization that your business idea has a very strong likelihood of success. A list of U.S. business incubators is available at the National Business Incubator Association.
Look for Venture Capitalists
They invest in fast growing businesses and technologies. These investors take the risk because they believe the business will survive. They can invest up to 1 million USD. The only challenge for young entrepreneurs is being able to convince these business gurus. This is because they prefer to invest in already established businesses. One of the easiest ways to convince them is having a good business plan.
Partner with Already Established Entrepreneurs
There are entrepreneurs that are already established in that business field you wish to join. Look for them and partner with them. You have many benefits from such partnership. You will learn some practical business tips that would have taken you a very long time to acquire. Also, you will use the period of the partnership to know if you can actually survive in the business when you go solo. Another benefit is that
Note that there are policies and agreements for business partnership, like how profits are shared and who acts as the active partner. Make sure you adhere to them and also make sure they don’t go against your sole aim, which is to start up your own business after you have saved enough capital.
Take Up Side Gigs
There are many lucrative side businesses, both online and offline that can help you raise money for that your dream business. Also there are some online sites where you can work from home and get paid. In real life, the first business that most top entrepreneurs joined was not there target business idea. They joined it to make money. Jeff Bezos worked in Wall Street after graduating from Princeton University. Once you save enough money from these side gigs, you can now use it to establish your dream business venture.
Take Up Loans
Use this as the last resort. Only go for loans if you are 65 to 75% sure that the business will survive. Also ensure you have another means to raise funds to pay back the money even if the business collapses. Taking loans from banks is an easier means, especially if you have a collateral. But think twice before taking this action because of the high interest involved. Also, avoid paying back in smaller bits, because you pay more interest at the end. I will advise you not to take a bank loan to start up a new business. Instead apply for bank loan for business expansion. This is because you will still need to pay back the loan plus interest, even if the business collapses. Using bank loans for business start ups has brought many young entrepreneurs to zero level.
If you have friends and families who are willing to help, borrow money from them.
A better loan source is a Peer-to-Peer (P2P) platform. Here, you get loans without going through banks. Potential investors lend you the loan once your reason for the loan is tangible. The investor releases the requested amount to the platform which now makes the loan available to you once you agree on the pay back terms. You pay back the money to the platform. Some recommended P2P platforms are Prosper and Lending Club.
These days, the internet is not only used to sell goods, you can also request and get financial assistance. You can post for financial assistance through some websites. There is a rule guiding most crowdfunding platforms, which is that the benefactors need to achieve a certain goal before the fund is released to them. If it is not met, the platform give the money back to the donor after deducting their operation cost. Some popular crowdfunding platforms can be found at CrowdFunder.
How to Save Money While Running a Young Business
Always Start on Small Scale
No business idea has a 100% success guarantee. it is always a wise and nice idea to start small and then expand with time. Starting a new business in a large scale is one of the big business mistakes most young entrepreneurs make.
Cut Off Unnecessary Expenses
There are some expenses that can be easily avoided and cut off. For instance, a young business making provision for its workers’ lunch. This can be avoided and then added back once the business has survived the taste of time.
Start with Fairly Used Machinery and Equipment
It is a wise idea to start a business with fairly used equipment, especially those costly ones. For instance, you could get a fairly used generator that could serve the organization till there is enough money to invest in a brand new generator. This is applicable to some other equipment. But note that there are some tools that you need to buy brand new if you really want them to serve your company at the startup stage. For instance, a brand new set of cushion and offostry chairs are ideal for your company’s waiting room.
Always Re-visit your Business Plan
Whenever a business management neglects the business plan guides, it tends to spend more. If there are some points that needs to be updated in the business plan, feel free to update it. But follow the business plan guide especially when taking a big business decision.
Opt for Trade by Barter where Possible
Here is another way to save money at the early stage of any business. Before you allocate money for a new project, check if there are companies who are willing to do the project in exchange for the service your company offers.
There are many ways to raise money for a new business, especially the small scale types. Not all the various ways to raise funds and save money for young business mentioned in this article will be convenient for you. Choose the most convenient and work towards it. You can read more ideas at MoneyCrashers.
If you have any contribution or inquiry to make in this article, kindly use the comment section. Share this article to your social media friends who are young entrepreneurs. Don’t forget to subscribe to our blog for free and receive free entrepreneurship tips. Enjoy!