Getting the right amount of small business funding that you need is no small task. It is stressful to need money in order to launch your business, and at times it can seem impossible to get.
Luckily in today’s marketplace, there are several different options available for securing business funding from outside parties, through revenue streams or through other means that you can build yourself. Below are some tips for getting small business funding, no matter how much you need to start or grow your business.
1. Nurture Your Network
This step is listed first because it facilitates all the other tips after it. Having a good professional network is key to being introduced and getting in front of the right people to not only get funding for your business but to grow it. Stay in touch with past co-workers and supervisors, and attend local meetup events and conferences. This can help you meet new people in your network that could eventually introduce you to an investor or loan manager.
However, just remember it’s important when you are networking to focus on knowing the whole person, and not on what they can offer you or how they can help you build your career. People don’t enjoy being taken advantage of, so as you build your network, make sure you focus on listening and being a resource to everyone you meet as well.
2. Earn the Money From a Job
If you are already working in the business or have a full-time job and want to start a business, it is possible to get the funding you need by earning the money yourself. Many entrepreneurs take on a second job or save up money from their primary source of income to have enough needed to start a business. This is usually the best financial option, as it doesn’t require taking on debt on behalf of yourself or under your company.
This may be a longer option time-wise, as you’re saving up the money instead of asking for a loan. However, having a business without that can give you some breathing room and help take the pressure off required monthly income targets that you need to hit. Additionally, if you’re building a business while also working at a full-time job, you have the job security you need to pay your bills while also acting as an entrepreneur.
3. Take Out a Bank Loan
The next most popular option is to take out a small business loan from a bank or other lender. This can be a good way to get a reasonable amount of money fast, but it often requires putting your personal credit or assets on the line.
Additionally, most lenders aren’t going to loan large amounts of money to someone who doesn’t have the income to pay it back or a set business plan to ensure that their loan is returned. Investment rates and amounts loaned depend highly on each institution, as well as the location and industry you’re in. Some banks consider certain industries riskier than others, so terms may be different depending on what type of business you have.
4. Pull Money from Current Business Profits
If you already have started your business and are looking for small business funding to grow it, one option is to pull profits and reinvest it into growing the business. This method is called bootstrapping.
Reevaluate your salary and expenses to see if there is any wiggle room for taking profits from the business and allocating it towards something that you know is going to improve it in the long run. Additionally, if you need the money for equipment or technology, make a spreadsheet to figure out the total cost of ownership and your ongoing monthly costs are going to be.
Investing in new technology, such as project management software, can help your business become more organized, more efficient and more profitable. ProjectManager has powerful project management features that can help you plan, track and report on projects, ensuring that every dollar spent is doing you good.
5. Work on a Better Sales Process
If you want to raise the money yourself, you can also look at improving your sales process to grow your sales and revenue. Often this just takes a little research, such as reading articles from experts online, listening to podcasts, or learning from sales books that can help you refine your process and figure out any stop gaps between contacting potential clients and growing your profits.
Related: The Importance of Customer Development for Startups
6. Get a Loan from Friends or Family
If you don’t have the profits or income to fund a business and you aren’t able to get a loan from a bank, consider getting a loan from friends or family. This can often be a tricky scenario, as not paying someone back you’re close to could have devastating effects and put their financial well-being on the line if it’s a stretch for them to loan you the money. Asking friends or family for a business loan should usually be your last resort, unless you have discussed it before, and they are being proactive about loaning you the money to be an investor in your business.
7. Look for Venture Investors
Many entrepreneurs look for investors in their business and will promise them a percentage of ownership in the company in exchange for a monetary contribution. The terms of an investment relationship vary widely, but this can be a good way to get the money you need that isn’t a loan.
It may be a good option if you are just starting the company and don’t have profits or income to put back into the business. Finding the right investor takes time and effort, so start by looking for investment groups in your local area or venture or seed capital investors that invest in your industry.
8. Have a Clear Pitch Deck
Whether you are creating a pitch for investors or for a business loan, it’s important to have a clear and concise pitch deck for your initial meeting. They should usually only be 20 minutes or less and have 10 slides or less that explain what the business idea is, how it solves a major pain point, and then overall specifics of the business such as the timeline of growth and why the money is needed.
9. Redo Your Branding
If you’re getting rejected for funding, it might be time to look at the impression you’re making with your business. If you don’t have any concise branding or logos yet, it might be worthwhile to consider this. Having professional branding that’s the right impression for your business and ensures that people see your company as a credible resource that is worthy of giving money to.
10. Re-Evaluate if You Really Need the Money
Finally, many business owners think that they need funding in order to start a business. But in today’s digital landscape, this may not be the case. You often don’t need a storefront for many types of businesses, choosing to run and sell products online instead.
Or, you can start by working from home for yourself and use contractors instead of opening an office and hiring full-time employees at the beginning. Think of ways that you can cut costs to avoid funding rather than going into debt for expenses that you may not need right away.
A business coach or mentor can help give you the feedback you need to perfect your pitch or find the right funding from available sources. Be smart about any money your borrowing and make sure that it’s necessary before signing an agreement that puts your business into debt or may affect your personal financial status.
Once you’re funded, then the real work begins. You must execute your plan and make sure it progresses successfully, within your budget and on time. ProjectManager is a cloud-based project management software that has the tools to help you do just that. From kanban boards to visually track workflow to a real-time dashboard that reports progress as it happens in easy-to-read charts and graphs, you’ll find that money well-spent. But first take a free run with this 30-day trial.