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How to Raise Capital for Your Business ( Etrepnuership)

Topics: Credit rating, Debt, Loan Pages: 11 (3846 words) Published: April 27, 2013
How to Raise Capital for Your Business ( Etrepnuership)

Launching a new business requires much skill and preparation. Entrepreneurs may not have the resources to raise capital in order to market their new business ideas; therefore, some great business ideas never become commercialized. This is a common dilemma that many entrepreneurs face. They often speculate about how to raise capital and same time, are unsure about how their startup will have the needed financial security to properly stay on track. Before a new business owner can raise capital for their startup, they must first identify the different sources of funding, find one that is most compatible with their needs, and then meet the given criteria of the investor or bank. These crucial steps can mean the difference between having the opportunity to successfully raise capital and leaving their new business ideas behind. Research- Entrepreneurs are encouraged to first investigate their funding options and conduct comprehensive market research to fully understand their potential targeted consumer base and any major competitors. Such information can be readily available both online and offline. The information superhighway

The internet has become the fastest and most efficient means by which a new business owner can perform market research and find out ways to raise capital. One important website to visit is the Small Business Administration (SBA) (, which can provide the necessary facts and resources needed for starting their new business. Every entrepreneur should take advantage of this valuable online resource so that they can become aware of all the different types of funding available. They will also be able to learn about how to meet the desired criteria in order to effectively raise capital for their new business. Offline resources

In addition to online resources, new business owners can also visit the public library or read through the local newspaper to find out more information on how to raise capital. The prospective business owner can also speak to successful entrepreneurs who have experience in the field. Since experienced entrepreneurs have been through this process already, they can provide a wealth of information to the new business owner. The entrepreneur can also build a network of contacts through them, receive constructive advice, and find out how they can raise capital for their new business. Every entrepreneur can greatly benefit from an experienced business owner’s wisdom, further giving them a leading advantage to raise capital. Identify Sources of Capital

There are different types of financing that will enable an entrepreneur to raise capital for their new business: Equity financing- This is a type of financing is essentially an exchange of money for a piece of ownership in a new business. This type of financing can usually be provided byventure capitalists and angel investors. An advantage of using equity financing as a way to raise capital is that the new business owner can pay back the loaned amount throughout a fixed duration of time. In addition, the new business owner can focus on making their product(s) profitable rather than worrying about paying back the investors immediately. One possible disadvantage of utilizing equity financing to raise capital is that the new business owner may lose partial or complete autonomy over their new business. Often times, angel investors or venture capitalists may want to have a large share in their invested company as well as have a say in every business decision made, including routine ones. A new business owner needs to explore the different options to raise capital as well as consider each of its benefits and disadvantages before deciding on what suits their new business the best. Personal funding

Using personal finances or “bootstrapping” is one of the first sources that an entrepreneur may consider using when they decide to raise capital for their new business. Money can be...
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