Have you finally decided it’s time to launch your own business? Is it time for your existing business to expand? Or, do you need to offset losses from economic downturns or the unexpected, like COVID-19? If you answered yes to any of the above, then use the following 5 ways to raise money for your business.How Can You Raise Money for Your Business?
If you’re able to swing this, then funding your business yourself is hands-down your best option. Besides not having to deal with interest or equity stakes, you can also play by your own rules.
Yeah. I know. You might be thinking that this is easier said than done. But, it is possible. One suggestion would be to live below your means. That’s just another way of saying not to spend more than you’re bringing. For example, if your take-home pay is $5,000, try to stay around $4,000. That extra grand can be invested into your business. Your other option? Earn more money. If you’re currently employed, then ask for a raise or work overtime. If you can manage it, start a side hustle until you’ve earned the money you need for your business. Ideally, you should work towards passive income. You’ll put in the work upfront, but then it requires little effort to keep the cash flowing in. Earning a passive income usually comes in the form of the four following types;
An accessible way to raise money for your business is by selling some of your personal assets. Don’t be forced to part with anything that you don’t want to. But, you could try the Marie Kondo method and ask if certain items spark joy. If not, sell these items online or have a yard sale. That might not bring in a ton of money. So, if you need to raise more money, consider my expensive items. I know people who have sold their cars and either bike or walk to work.
For longer commutes, they use public transportation or a ride-sharing service. In addition to making money from the sale of the car, they also don’t have to worry about recurring expenses like insurance, registration, gas, and maintenance. You can also sell stocks, bonds, real estate, and high-end electronics. You may even want to downsize your home or at least borrow a home equity loan.
Another accessible way to fund your business is by withdrawing whatever you have in a savings account. I get that you worked hard to bolster your savings. But, it’s investing in your dream or passion. And, when your business takes off, you can replenish your savings.
If you have a Roth IRA, you’re able to withdraw your original contributions tax- and penalty-free. If you withdraw from a traditional IRA or employer-sponsored retirement account expect a 10% IRS penalty plus the back taxes that you owe from when you made the original contribution.
Borrow startup capital. Don’t have enough cash on hand to invest in your business yourself? No worries. Rather than bootstrapping, borrow the money you need from the following sources.
From my personal experience, you might want to tread lightly here. Money has the ability to permanently fracture even the closets of relationships. However, this is still a tried and true tactic if you need a small amount of money.
I think it’s important to keep this as professional as possible. It’s a simple way to keep your personal and professional lives separate. Also, it shows that you respect them. So, when approaching a friend or family member, keep these pointers in mind;
Yes. Credit cards do come with exorbitant interest rates. As such, using your credit card can make it a challenge to pay off your debt leaving you in a vicious debt cycle. At the same time, credit cards aren’t all bad — especially when you need money for your business. For one, they can be flexible. You can put as much or little as you want on your card. Secondly, you don’t have to fill out lengthy and time-consuming business loans. And, even though you’ll pay for it, you can take out cash advances if needed.
When possible, try to stick with low-APR credit cards. This will minimize your rate. And, consider switching to rewards credit cards like cash-back cards (Chase Ink Business Unlimited®) or travel rewards cards (The Business Platinum Card® from American Express).