how to raise money to start a business

How to Raise Money to Start a Business

It’s the American dream: starting a business with your own two hands and making a living as your own boss. But as any entrepreneur knows, it’s not something that happens overnight.

If you already have an idea for your new business and a plan to make it happen, the next thing you need is capital. As the saying goes, “you need to spend money to make money.”

If you’re not sure how to raise money to start a business, this handy guide can help.

How to Raise Money to Start a Business

Fortunately, there are plenty of ways to get the funding you need to start your business. The first step is figuring out how much money you actually need. When you have your magic number in mind, these methods can help you reach it:

Take Advantage of the Web

There are plenty of websites like KickStarter to raise business funding. The idea is that entrepreneurs ask for capital upfront from the general public, usually in exchange for a product when you’re up and running.

Plenty of successful businesses have gotten their start on KickStarter. It’s also a great way to gauge the interest in your product or service.

Just be careful to honor the commitments you make. It isn’t free money, and you need to offer something manageable in exchange and follow through with it.

Start Small and Use Profits Wisely

You may have huge goals for your company, but it may be best to start small by offering products or service with little or no start-up costs. Look at Amazon. They started as a simple online bookstore. By gradually expanding what they offered, they’re now the #2 most valuable company in the country.

The key, however, is putting your profits back into the business. Don’t quit your day job the second your company starts making a profit. That’s another key takeaway from Amazon, and it’s clearly served them well.

Target the Right Investors

Sometimes you need to take on investors to get the capital you need. Don’t reach out to any and every investor you find. Look for ones that specialize in your niche and your area.

For instance, let’s say you want to start a business in Brazil. Contacting an investor who’s familiar with the Brazilian economy is a great first step (for more tips about starting a Brazil business, view here).

The same is true for your industry. Some investors specialize in fashion, technology, or other niches.

Play the Stock Market

If you’ve saved some money for your business and are willing to risk it to build your funds, try investing in the stock market. Of course, there’s some risk involved, but it can also be a great way to build your existing funds while you search for other sources of capital.

Get a Business Loan

There’s no shame in taking out a business loan. Just make sure your business is far enough evolved that you can comfortably expect to make the payments. Even if a bank is willing to give you a loan for a certain amount, don’t borrow more than you can confidently pay back.

Liquidate Your Assets

If you’re truly passionate about your company, another option is to sell your home or liquidate other assets to get the capital you need. This can be risky business, though, so don’t liquidate more than you can afford to lose.

Starting Your Business

The tips above are great ways to get you started toward building your new business. However, learning how to raise money to start a business is just one piece of the puzzle you need to create a successful business.

For more helpful advice, check out more articles on our financial tips blog.