By Kayla Matthews
Is your small business ready for some significant growth? If your funds are limited, there are plenty of funding resources available to small businesses. Whether you want to unleash a newly designed product or open a second location, the six types of fundraising below will help you achieve your goal.
Crowdfunding is a way for small businesses to reach out to individual consumers. Pitch your business idea, whether brand new or growing, and raise money in exchange for rewards, future repayment or equity.
The best crowdfunding websites for small businesses include:
Look for a crowdfunding site with a broad audience, offering as much exposure to potential investors as possible. And read testimonials from businesses who previously used the site.
2. Business Incubators
If you’re a small business in the early stages of growth, consider joining a business incubator. Some business incubators operate online while others are physical spaces where entrepreneurs can network. The goal is to speed up business development and success.
Instead of an incubator, some programs are called accelerators, meant to boost more developed businesses. These types of organizations have funds or funding sources to raise capital. They also offer access to invaluable resources like accountants, lawyers, coaches and more.
3. Grant Competitions
Enter a competition aimed at small businesses to win grants, exposure and new customers. If you’re a woman-owned company invested in environmental change, check out the Eileen Fisher Foundation. The organization gives out $200,000 annually to up to 10 businesses.
Other grants to apply for include:
- Etsy Maker Cities Grant
- Visa Everywhere Initiative
- Sam’s Club Grant Program
- FedEx Small Business Grant
Always read the requirements of a grant before starting an application. And keep a calendar of deadlines to ensure you submit documents on time.
4. Angel Investors
As a small business, your development team is likely made up of just a few people. Team members will need to take on multiple roles to cover all aspects of fundraising, including account, event planner and social media manager. They’ll also need to be adept at creating relationships with potential donors, like angel investors.
If you’ve ever watched the TV show Shark Tank, you know that angel investors are well-to-do individuals who provide business capital in return for equity. The percentage of equity is based on a business’s profits and expected growth. Some of the most prolific angel investors include Fabrice Grinda, Paul Buchheit and Wei Guo.
5. Product Pre-Sales
If your business is product-based, consider using pre-sales as a way to gain funding. By pre-selling goods, you can obtain the capital to get started while ensuring your stock will be sold out come launch day. It also means consumers rely on you to maintain deadlines and follow through on orders.
If you want to raise funds through pre-sales, set up a sales page on your website outlining your product and the basic features. Call attention to your target audience and tell them how your product will help them. Include the benefits your product has over competitors. And don’t forget to remind everyone that purchases are a pre-sale and the product has not yet been created.
6. Venture Capitalists
Venture capitalists, similar to angel investors, offer to fund start-ups and growing businesses in exchange for a share of the equity. The goal of a venture capitalist is to invest in a business that will provide high rates of return. Capital investments typically last five to eight years with an expected return of 25% or higher.
Some businesses seek venture capitalists when in need of expertise. For example, Bill Gates convinced Dave Marquardt, co-founder of the firm August Capital, to invest in Microsoft in 1981. He was on the company’s board of directors for more than 30 years.
Are you a start-up looking to expand? The six funding options above can help you meet your business goals, even when resources are limited. Look into a crowdfunding website like Kickstarter or Indiegogo. Meet with interested angel investors who provide capital in exchange for equity. Or enter competitions to earn business-boosting grants.
About the Author: Kayla Matthews writes about communication and workplace productivity on her blog, Productivity Theory. Her work has also appeared on Talent Culture, MakeUseOf, The Muse and Fast Company.