Even if your business is relatively small, or you’re just starting out, there’s a good chance that you’re going to need money to grow beyond the income you’re currently making from that business. You might want to launch a major upgrade of your website, you might want to expand into a new product or service line, you might want to hire new employees, or you might even want to open your first “brick and mortar” location.
Having launched a business in the first place means that you’ve probably already invested a significant amount of your own money into the company. Maybe you’re already tapped out and need to look elsewhere for additional small business funding. Here are some tips for getting the money you need to grow your small business.
What do You Need the Money For?
The first step is to identify the precise needs for your fundraising. Don’t just think in generalities; once you’ve identified your need, map out the steps you need to take in order to accomplish your next goal. Be as specific as you can.
How Much Money do You Need?
Now that you’ve scoped out exactly what you need the money for, it’s time to figure out how much it’s all going to cost. Depending on what you need, you can go online or call local service providers to get price estimates. It’s not a bad idea to include an extra amount (perhaps 10-20%) to the amount you want to raise, just to cover unexpected items that might arise.
How Quickly Can You Repay?
One big factor in choosing the right kind of small business funding is understanding how quickly you’ll be able to repay any funds you might borrow. The longer it’s going to take, the more important it is for you to secure favorable terms, including the lowest possible interest rate.
Is Your Business Exciting?
This might sound like an odd question. Of course your business is likely to be exciting to you, otherwise, you wouldn’t be doing it! But is it likely to capture the imagination or interest of some segment of the general public? In certain situations, it might make sense to raise money through crowdfunding websites. Doing so might make particular sense if you’re looking to develop a new product — individuals who contribute to your crowdfunding effort might receive one of those new products for free or at reduced costs.
Take a Look at Your Local Banks and Credit Unions.
Believe it or not, traditional bank and credit union lending is still a great choice for many small businesses looking to raise funds. You will likely start at the banking institutions you already do business with, but be sure to shop around to other banks and credit unions in your area.
Check Out the Small Business Administration.
The paperwork can feel overwhelming, but the U.S. Small Business Administration can be a vital source for loan guarantees for your small business.
Finally, if you only need a small amount of funding, you might (as a last resort) consider using your personal credit card. Be sure to understand the differences in fees and interest rates for cash advances versus product purchases, and don’t take on personal debt unless you have a high degree of confidence you’ll be able to pay off that debt quickly.
