Once you've completed the preparation, you can start to explore your capital raising options. These will differ depending on the size of your business. Larger companies usually have history and experience behind them and will raise most of their capital through stocks, dividends and even loans.
For smaller businesses, raising capital can be much harder. Here are ten popular ways SMEs raise capital.
Pitch to yourself first! You should always be your first port of call. Investing in your own venture shows outside investors you believe in what you are doing.
2. Friends and Family
Friends and family will often be willing to lend a hand if you can show them you’ve done the groundwork and can offer something in return (such as money paid back with interest). It may not be enough capital to get you going or growing, but it is often a good start.
3. Business Loans
Getting a bank loan can be hard. You'll need to ensure you have a solid business plan in place, as well as collateral for your loan. Consider the pros and cons carefully before making a decision.
4. Angel Investors
Angel Investors are individuals with a high net worth who like investing in start-ups in exchange for a small portion of ownership and a high return on their investment. They’ll want to know what your exit plan is, should your venture go belly-up.
5. Venture Capitalists
Relying on Venture Capitalists is one of the hardest ways of raising capital. They will expect huge returns and you'll need to meet strict criteria before they will consider investing in your business. However, if successful, your business may also gain additional guidance and support.
6. Private Investors
Private investors are usually sophisticated and experienced investors who will be hard to persuade but could be worth the effort. They’ll need to see a solid business plan and proof that your venture will be profitable.
7. Grants and Government funding
For a business with the right product or service, a solid business plan and excellent potential, government grants and funding can be the way to go.
Sometimes customers will be happy to pay upfront for a product or service they believe is worthwhile. These upfront payments might be enough to fund your business and help it get off the ground or into new markets.
9. Non-Government Organisations (NGOs)
While an NGO may not be able to provide direct financial assistance, they are often able to help you raise capital. In addition, they might be able to help you find interested investors looking for smart investment opportunities.
Crowdfunding is a great option for raising capital for small businesses and start-ups. If done right, crowdfunding can get you the capital you need and maybe even a little to spare.
PrimaryMarkets is an independent, global unlisted securities and investments platform and marketplace for sellers, buyers and intermediaries. We partner with Crowd88, an equity crowdfunding platform that has recently launched in Australia. Together, our experienced teams can assist you in identifying and assessing your opportunities for raising capital.