Raising Capital: Funding Options for Your Business

capital for businessWhile self-funding is the most common business funding method, it is not suitable for everyone, especially those with limited savings. As expenses often exceed revenue during the infancy stages of business, it is important to explore different funding options.

Here’s a discussion on the topic to guide you:

Venture Capital

This funding option is a type of equity financing that supports the budgetary needs of companies with potentially high returns. Most venture capital investments are made through cash in exchange of shares or executive role in the company. It is completely different from other financing sources, as it only focuses on new and high-growth businesses. It is an active form of financing and monitors the portfolio companies through capital structure and strategic marketing.

Bootstrapping

This refers to building or starting business with little or no money. According to the State Government of Victoria, a bootstrapped business operates using credit cards and advances from customers, leasing instead of buying equipment, and multiskilling. Perth accountancy firms like Femia-Accountants.com.au also say that bootstrapping is a good option for small businesses that cannot attract venture capital.

Business Angel

Angel investors can be individuals or former business associates who are willing to invest money in your company. It is ideal for established businesses that need funds to develop a new product or marketing strategy. Angel investors provide a portion of capital and ask only for debt repayments or partial ownership of the company in return.

Crowdsourcing

This method is done through social media networks to encourage friends, family, acquaintances, and the general public to lend small amounts of money. This has gained popularity during the past few years, with young and tech-savvy entrepreneurs commonly employing this method. Crowdsourcing only suits businesses that need a small amount of money.

In capitalising a small business, it is important to know the different financing options when you’re ready to expand. It is also best to consult business coaches and accountants to know which funding option is best for your business.

Posted on by Teresa Harper in E-Biz

About Teresa Harper

Teresa is not your typical mother of three. She runs a successful online store that offers fashion items and household essentials. In her free time, she likes to browse fashion blogs and be updated with the latest trends.

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