Secrets To Raising More Capital

Raising capital to launch new businesses has always been a challenge to entrepreneurs. But by following these 7 tips you will catapult your capital hunting process:

1.Choosing the right sources of capital for a business can be just as important as choosing the right form of ownership or the right location. It is the decision that will influence a company for a lifetime; so, entrepreneurs must weigh their options carefully before committing to a particular funding source. “It is important that companies in need of capital align themselves with the sources that best fit their needs,” says one financial consultant. “The success of a company often depends on the success of that relationship.

2.The money is out there: The key is just knowing where to look. Entrepreneurs must do their homework before they set out to raise money for their ventures. Understanding which sources of funding are best suited for the various stages of a company’s growth and then taking the time to learn how those sources work, are essential to success.

3.Raising money takes time and effort. Sometimes entrepreneurs are surprised at the amount of energy and time that is required to raise the capital needed to feed their cash-hungry, growing businesses. The process usually includes lots of promising leads; most of which turn out to be dead ends. Meetings with and presentations to lots of potential investors and lenders can crowd out the time needed to manage a growing company. Entrepreneurs also discover that raising capital is an ongoing job. “The fund-raising job is a marathon, not a spirit,” says Jerusha Stewart, founder of iSpiritus Soul Spa, a store selling personal growth and well-being products.

4.Creativity counts. Although some traditional sources of funds now play a lesser role in small business financing then in the past; other sources - from large corporations and customers, to international venture capitalists and state or local programs - are picking up the slack. To find the financing their businesses demand, entrepreneurs must use as much creativity in attracting financing as they did in generating the ideas for their products and services. For instance, after striking out with traditional sources of funding, EZConserve, a company that makes software that provides energy management tools for large PC Networks, turned to the nonprofit group Northwest Energy Efficiency Alliance and received a sizable grant as well as marketing assistance that fueled its growth.

5.The World Wide Web puts at entrepreneurs’ fingertips vast resources of information that can lead to financing; use it. The web often offers entrepreneurs, especially those looking for relatively small amounts of money, the opportunity to discover sources of funds that they otherwise might miss. The web provides links to many useful sites related to raising both start-up and growth capital. The web also provides a low-cost, convenient way for entrepreneurs to get their business plans into potential investor’s hands anywhere and everywhere in the world. When searching for sources of capital, you must not overlook this valuable tool!

6.Be thoroughly prepared before approaching potential lenders and investors. In this hunt for capital, tracking down leads is tough enough; don’t blow a potential deal by failing to be ready to present your business idea to potential lenders and investors in a clear, concise, convincing way. That of course requires a solid business plan.

7.Entrepreneurs cannot overestimate the importance of making sure that the “chemistry” among themselves, their companies, and their funding sources is a good one. Too many entrepreneurs get into financial deals because they needed the money to keep their businesses growing only to discover that their plans do not match those of their financial partners.