Marketlend Academy: How Can I Fund my Business?
Funding is often a constant concern for SMEs. To fund a business doesn’t just mean finance and there are creative ways to bring money in the door that can support growth.
What are your best options for funding? Here are some “outside-of-the-box” options that can help.
Presell Services or Products
This is a creative way to fundraise when your business is in the early stages. Get your elevator pitch ready for anyone who wants to talk about your new project. If you plan to offer a consulting service, web security, a new line of grocery stores, offer a presale.
A presale means you receive money before your grand opening. Give your customers proof of purchase, such as a coupon, to be redeemed when the business opens. Customers love to help a business they believe in and are happy to exchange a proof of purchase for something new.
This works best if you can show proof that your business is more than a concept. Blueprints for your new building, a working model, or an online store all help push presales.
Approach Angel Investors
If you have a tech startup or product idea that will disrupt a market, try pitching to a group of angel investors. If you get an offer of money, it will come with the caveat of equity. Angels want to take part in any business they fund, so they choose businesses they know well or like. This can work to your advantage if you are open to hearing a new voice as you build or expand. However, if you don’t want a board or individual looking over your shoulder or combing through your books, this might be a detriment to your growth.
The key to approaching angel investors is use your connections and your reputation. Start by asking people you already know if they have any connections to the investment community and use those familial or social ties to build your network. When you meet a new investor because a mutual, and trusted colleague introduced you, the prospect of getting money is much greater.
If no one can give you an introduction, try a cold email or a message sent without the buffer of a personal introduction first. Research the investor you want to talk to and see what kinds of projects they prefer. Stick to those who are active in your industry and go for it.
Once you take meetings, be sure to be as transparent as possible with your numbers. Any exaggeration or dishonesties will paint you in a negative hue and keep potential partners at bay. Be yourself and let your business speak for itself to win people over.
Crowdfunding sites like Kickstarter let you set a financial goal, break down your vision and timeline for visitors, then market yourself to potential donors. Each campaign has a set number of days to raise the necessary money. If you reach your goal, you get the money deposited into your account and the site asks for a small percentage of what you earned. If the donations fall short, you receive nothing.
Successful campaigns start long before they are up on the crowdfunding site. This requires marketing videos, a large following and tons of buzz over what you have in the works. The most successful campaigns have money promised to them before the timer ticks down.
Once the campaign is up, it can be a full-time job to manage the social media and email marketing to bring in additional money. You will also have to organise rewards for donors that don’t gobble up all your new money but still make it worthwhile to give. A campaign requires creative marketing in all outlets in order to succeed.
It’s a lot to handle, but people make real money on these sites. If you are a master of marketing, this is a good option.
Australia’s government offers a variety of grants for small businesses, but expect a complex application process and very specific criteria for funding.
Grants are available at the state or federal level and are listed online. They tend to favor specific projects or a stage of business, such as funds to start or funds to hire as you expand. Research grants ahead of time so you know what to apply for throughout the year. Tailor each application to the specific grant, don’t rely on generic forms and answer each question with clear, honest responses.
Some of the categories for grants include expansion, green business or disaster recovery. They’ve been created to help solve problems as opposed to a basic round of funding. Check out the whole list and mark which ones line up with your business or future undertaking, then mark due dates on your calendar. If you can talk to someone who received a grant in the past, ask for advice on how to present your problem in the best way possible.
Before you Finance
Still think you may need finance? Here are some things to avoid to help you make finding finance smoother and more likely to lead to success:
- Not working with an accountant – Many business owners turn to bookkeepers, but an accountant will keep your statements in order and all your numbers on point.
- The wrong partner – Investors want to see dynamic teams that balance each other out and have a clear vision with a solid plan to put it in place. Don’t waste time with someone who is unprofessional or doubts your vision. Find a partner who shares your vision and knows exactly how to help you succeed.
- No plan for the money – Anyone who funds you wants to know your plan on how to spend it. Have all of that in place before you borrow or accept the grant.
- Waiting to ask – Plan out your search for finances early. The decision to put off the search for finances can put unnecessary stress on your business. You know what you need to stay functional, so don’t hesitate to ask for it