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Raising Capital for Your Startup Part 1

HOW TO START FUNDRAISING FOR YOUR BUSINESS

One of the biggest obstacles of starting a business is finding the funding to get it off the ground. Startup and operating costs are at their highest in the first year of business. From product research and development to marketing and advertising, not to mention payroll, rent, office supplies, and your own living expenses, the costs add up. Your business may not generate enough revenue to support itself for the first few months, or even years, so you will have to find a way to raise enough capital to stay afloat.

The first thing you need to determine (after writing your business plan, of course) is the amount of funding you need to start the business. This will depend on your business model. Some businesses only require a small amount of startup capital, while others, like manufacturing plants, require a substantially greater amount of capital to start operating. Some businesses, like retail shops, generally have lower operating costs, but require a moderate amount of capital to purchase inventory, lease space and display their wares. On the other hand, service-based businesses, such as custom closet installers, require very little startup capital, especially if the business is run out of the owner’s home. Multi-level marketing businesses like CaBi, Pampered Chef, Silpada, and other self-starter sales roles are other low-cost business options for entrepreneurs who are ready to take the plunge and become their own boss.

 

Consider a variety of lending options when searching for capital to start your business. All investors share the universal motive of wanting to make a profit. Keep this in mind as you try to bargain with potential investors; it is your job to convince them that your company is a good, profitable investment. Start looking for investors by listing your personal business contacts, including your attorney, accountant, banker, friends, and family members.  Search the internet to find online trade magazines that highlight where other startup companies have found capital. Next, join your local Small Business Association and industry trade associations. Attend as many local networking events as possible to increase your chances of finding investors.

When looking for financing, don’t approach your best prospects first. Instead, call on your long shots and practice delivering your pitch to them. This gives you the opportunity to work out the rough sections of your presentation before you approach the sources that have the most potential to invest or loan the capital necessary for your startup.

When you are rejected for financing, it helps to learn why your pitch was rejected and then ask for suggestions for other people or institutions you can pursue in the future. Always ask for more than you need when applying for a loan or searching for investors. Think of this as an emergency savings fund. There is nothing worse than having to ask for more money, so keep this extra funding as insurance in case you need it.

There are many different types of fundraising opportunities available when starting your own business. Next week’s blog post will cover these fundraising methods and share best practices for implementing them. Subscribe and get notified when the next article comes out.

If you have ever dreamed of owning your own custom closet and garage business, or if you already have a business and are looking for a new investment prospect, take the next step towards an exciting opportunity with Organizers Direct. We provide a full week of in-house training with our team of professionals including industry leader, Neil Balter. From sales and marketing to installation and design, we provide you with the best education in the industry. See what else the Organizers Direct Dealer Program can do for you!

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