By Bond Collective Staff
It’s an unspoken rule in business that a great idea only goes so far. Eventually, you need money. But most startups and small businesses don’t have a bottomless bank account to keep them going until they’re in the black. What’s the solution? Raise money for business from outside sources.
In this article, we’ll show you 14 ways to raise the money you need to get your great idea off the ground.
Tips For Maximizing Your Cash
Overhead — expenses like utilities, technology, and rent — is one of the largest costs that most startups and small businesses have to contend with. If you can restrict your overhead to the absolute minimum, you can free up cash for use elsewhere.
That’s why basing your operation in a virtual office or other shared workspace, like Bond Collective, is a wise choice for businesses at all stages of development. Everything you need to do your job well is included in one low monthly fee that is much less than what you would pay to maintain your own space.
That just makes good cents.
Avoid Conventional Leases
A conventional lease is notoriously expensive, not to mention restrictive. You can conserve much-needed capital by skipping the conventional lease altogether and opting instead for a temporary office space like those offered by Bond Collective.
In addition to saving funds, you’ll also be better positioned to expand or contract your workspace footprint as your business needs change.
At Bond Collective, you can work from a hot desk in June, a private office in July, a multi-office suite in August, and back down to a reserved desk in September. There’s no better way to raise money for business than to save it yourself.
Keep Your Burn Rate Low
Burn rate is the rate at which your business spends money before generating positive income from sales and operations. Keeping your burn rate low means you’ll have more money to funnel to other parts of the business.
It also means you’ll create for yourself a longer runway (i.e., how long your business has to become profitable before it fails). And with a longer runway, your business will look more attractive to potential investors and have a much better chance of success.
14 Ways To Raise Money For Business
Take a page from the big names in the tech industry and sell your products before they launch. Offering pre-orders ahead of your scheduled rollout date is a great way to gauge consumer demand and raise money for business at the same time.
A well-run pre-sale can provide much-needed funds to finance your business in the early stages of development.
Don’t want to give away equity shares of your business right from the start? Go the crowdfunding route instead.
Choose a crowdfunding website, create a pitch, share your business model, and offer incentives to interested individuals. Then, through the power of micro-donations, you can begin to raise money for your startup.
3) Credit Cards
Although it’s not the ideal way to raise money for business, credit cards can be a quick and easy solution to your money woes when cash runs low. With a business credit card, you can charge the things you need and write a check for the minimum payment each month.
Just remember to pay off these debts first when the business gets going or you’re going to get buried under sky-high interest payments.
4) Personal Assets
One of the most accessible ways to raise money for business is to use your personal assets. Tap into your savings or cash in a bond. Sell some valuables. Downsize into a smaller living space. Walk to work instead of driving or spending money on public transportation.
When you really start looking, you’ll find plenty of ways to use the assets you’ve got to build your business for the future.
5) Angel Investors
Angel investors are individuals with capital to spare who are willing to take risks on fledgling businesses if they foresee a significant return.
Another benefit of raising money for business through angel investors is that they are more willing to offer mentorship than straight investors or venture capital groups.
6) Strategic Partners
If you have a relationship with a supplier, distributor, or even a customer who can benefit from your product or service, it doesn’t hurt to ask them to get involved.
Help them see what they can gain by partnering with your startup, and they may be willing to cut costs, provide you with services, or invest directly in your budding business.
7) Venture Capital
If you need large amounts of money quickly, venture capital investors may be just what you’re looking for. Keep in mind that those investors will be with you until they recoup their costs (and profits) and they may demand a short payback time frame (e.g., three to five years).
8) Pay As You Go
Paying as you go — also known as bootstrapping — is a cost-effective way to make your company’s capital go as far as possible. With the pay-as-you-go method, every dime gets redirected into the business to pay costs and keep the lights on.
That means you may have to live without a paycheck for a while, but if you’re willing to sacrifice for the future, it’s a straightforward method of raising money for business.
9) Business Incubators
Another way to raise money for business is to get involved with an incubator. Business incubators provide money (small amounts), tools, training, and networking to startups and small businesses in their area.
Most business incubators are located in major cities, but don’t dismiss this option if you live in a small town. Do a little investigating and you may be surprised what’s available.
10) Share Risk With Your Employees
Instead of paying your employees a market salary (say $50,000 per year), share the risk and raise money for business at the same time by offering them $40,000 per year plus equity incentives of $10,000 to be paid later.
You can then channel the money you saved into making your business profitable sooner.
It may not seem like a viable way to raise money for business, and you may not make everything you need in one fell swoop, but competing in entrepreneurial showcases (that offer cash prizes) can supplement the money you raise from other sources.
And whether you win or lose, media coverage of the event can give your business some much-needed exposure.
12) Get The Money To Come To You
When trying to raise money for business, you’ve got to think outside the box. So instead of taking your business to the investors, bring the investors to your business.
Consider placing an “investors wanted” ad in an industry publication. Generate buzz about your brand and position your business as an exclusive opportunity, and you’ll have investors contacting you to get involved.
13) Bank Loans
If you’ve got a solid business plan, profit forecast, and estimated time to maturity, you might be able to raise money for business with your local bank. You will have to provide collateral against the loan, but if you’ve got a good relationship with the banks in your area, this can be a relatively simple way to secure funding quickly.
14) Government Programs
Government programs are another channel worth investigating if you’re looking to raise money for business. These programs move slower than other options on this list, but the funding they provide can be substantial.
Keep More Money In The Bank With A Coworking Space
One of the most efficient methods to raise money for business is to keep as much of it as possible in your bank account. And the best way to keep your bank balance high is to save on expenses by basing your operation in a coworking space.
At Bond Collective, we offer everything you need to take your startup or small business to the next level. It doesn’t matter if you’re a lone-wolf entrepreneur or a team of 50 or more. You’ll find just the right work environment with us.
At Bond Collective, you also get:
Incredibly fast Wi-Fi
Private label mail service
Daily on-site cleaning
Concession food market
To learn more about how coworking space benefits startups, small businesses, remote workers, and companies of all sizes, visit BondCollective.com today.