Raising business capital is one of the most important things that you will have to do in your capacity as the owner of your business, so it makes sense that you want to do everything possible to raise as much as you can.
But what, exactly, can you do?
Like so many other areas of business development, there’s no “one size fits all” solution to infusing money into your business. A lot of factors have to be considered and many variables have to be taken into account in order for a business owner like you to determine the best way to approaching the problem.
With that in mind, let’s take some of the things that you can do when raising business capital and you may find a solution that best fits your needs and those of your growing company.
How to Approach Venture Capital for Your Company
Just as there are many different kinds of businesses out there, so too are there varied ways to raise money in order to finance them.
Some of your options for securing enough money to get your venture off the ground can include:
- Taking Out a Small Business Loan – This is one of the most obvious routes that first time business owners follow simply because it may be one of the most feasible ways of getting a company started.When taking out a small business loan, you can go through a bank or credit union in order to secure financing, but doing so requires you to do your homework in order to improve your chances of getting the loan you need.
Above all else, you want a strong business plan that will show the lender you can be trusted to repay the loan when required. Your plan will illustrate a clear direction that your company will take to approach realistic goals and eventually make money, so make sure that you include as much detail as possible.
- Taking Out a Personal Loan – If you find that small business loans offer far more than you need to get started, then personal loans might be your best alternative.Assuming your credit is strong and your employment history is solid, securing a personal loan for your business may be easier than getting a small business loan. Try to determine how much you need to get started and consider this when asking the question of raising business capital.
- Look for Angel Investors – Sometimes, raising money for business means networking with people who do nothing but fund businesses.As discussed in a previous post, finding angel investors to help your business along during its infancy is one way to get things started. The right investors not only know your industry but, will often be able to provide you with experience and a hands-on approach to management that could be a huge boon to you and your new company.
- Look to Friends and Family – This may seem like a comparatively unconventional tactic for raising business capital, but have you thought of going into a joint venture with people you already know?Whether the person is a sibling, a college friend, or anyone else along those lines, you may be able to pool your resources together to form a business venture with someone whose strengths and abilities could benefit the company in the long run.
These are some of the ways that you can fund your business when you’re starting up, but you want to make sure that you have enough to operate smoothly without getting blindsided by other costs.
So what should you take into account when raising business capital?
Doing Your Homework
When you look around at any business that you visit, there are a lot of different aspects of that company that you undoubtedly don’t think much about. These are things that go beyond basics like employee compensation and renting office space.
Let’s take a look at some of those things and you’ll get some idea of what to expect.
- Licensing – One of the most important costs associated with running a business. No matter what industry you’re in, it’s extremely likely that some form of licensing will be involved in making things happen and ensuring that your business is in compliance with local laws and regulations.
- Ongoing Training – This applies to you just as much as it does to anyone who would be working for you. You can teach yourself how to do something, but getting better at it takes time and commitment.That’s why ongoing training should be part of your plans in raising business capital. You want to be sure that everyone is constantly improving his or her skill sets in order to guarantee the best service delivery.
- Your Marketing Budget – Whether you’re simply putting up a few signs, using web marketing, or taking out local television ads, you need a way to let people know that your company exists.So it makes perfect sense that part of raising business capital is factoring the cost of your advertising efforts into the grand scheme of things.
This, like many other costs, can change with time, so you want to leave yourself some leeway concerning what everything will cost before you get started.
This is a small sample of the specialized areas that you’ll need to consider on top of normal expenses when raising business capital but, by keeping these things in mind, you can ensure that your efforts will go toward securing enough funding to get a viable enterprise on its feet and on the road to success.
Remember, running a business successfully does not need to be complicated. Keep it simple!
For more information on business analysis, business planning, and ways to grow your small business profitably, please check out our website www.portalcfo.com. Follow us on Twitter @portalcfo
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Manny Skevofilax is a consultant and speaker that helps his clients successfully navigate the challenges of growing their businesses profitably. Since 2003, Manny helps businesses enhance their results by using his experience in strategic planning, financial statement analysis, operations, organizational development, and team-building. His consulting firm, PORTAL CFO Consulting, Inc., has attracted clients from diverse industries in the United States and abroad.
Manny can be reached at 410-808-3441 or via email at manny@portalcfo.com.