Many new business owners are put off by the cost of running their companies. Others might want to upscale but feel limited by a lack of investments. Whatever your goals are, there are ways to raise money without taking out a loan.
24% of business owners rely on various loans and credit, according to fintech startup, DollarHand. This is a great option for many people, but there are other ways to raise money. In this guide, we detail 4 of them.
Research grants
Not every business that applies for a grant will receive one, but the process can help you to improve your business plan and make sure your accounts are in order. If you are successful, the rewards are often worth the effort.
Government grants can help small businesses to cover expenses such as machinery, IT equipment, and rent. There are also grants and incentives for businesses that offer eco-friendly products, or who have green practices.
The process to get a grant can be quite strict. Make sure you have all your documents in order before you apply. You can look for grants that might benefit your company on government websites such as Gov.co.uk.
Enter contests
Business contests are a great way to receive ‘free’ money for your business. The prizes can be investment, opportunities, and potentially also mentorship. Prize money is particularly valuable as it comes with little or no stipulations.
While contests give you more flexibility with your winnings than grants do, they are even harder to win. They should not be any business’s first choice for funding, as there is a huge chance that your energy could have been for nothing. For this reason, it can be worth targeting competitions within your company’s specific niche.
Launch a Pre-Sale
This option is great for people with a pre-established audience. If you know people are already excited about your product or service, you could give customers the option to pre-order it.
Not only will this give you an idea of how much interest people have in each product, but you lower the chance of having inventory sitting around unsold. It saves businesses from making risky investments with the chance that they will never see returns.
Use crowdfunding
This is another great option for people with a pre-established audience, but also works well for new businesses. Websites such as GoFundMe are great ways to gauge public interest in your product as well as getting ‘free’ money from customers all over the world.
The process is relatively easy. You just upload some information and images onto the platform, as well as some optional rewards for people who choose to donate. You need to estimate how much money you need, as well as describe what steps you will make once you have the money.
The only difficult thing about crowdfunding is marketing. This step can be difficult for businesses who do not have a large following. Lesser-known businesses may benefit from hiring a social media manager, or learning these skills on their own.