Starting your own business is one thing, building a loyal customer base is another, but expanding your business can seem like a hassle, especially if you don’t know how. You will need to raise capital to grow any business.
The age-old issue of limited or even no access to financing is one of the primary causes of some businesses’ stagnation.
While some business owners go all out and bootstrap the growth process by forgoing a salary and exhausting all of their personal money, there are other options.
These additional possibilities can assist you in funding your progress without involving your personal cash, but they will demand hard effort and ingenuity.
Let’s take a look at some creative ways to raise money for your business.
1. Upfront payment from customers is a creative way to raise money for your business
This method involves your customers paying up to 50%, 70%, or even 100% upfront for the project’s cost. This way, you don’t need to use your own money to pay for anything or have an inventory.
Running a solar energy business for residential homes and office spaces, for example, can be capital-intensive. You will need funds to purchase or have an inventory of solar panels, inverters, batteries, etc.
However, you can use the customer’s money to get the needed stock. This saves you money because there will be no need to buy any material unless there is a real client that has already paid money.
This approach might be effective if you already have a good reputation with your clients, you run a business that produces customised items, or your company offers services like training, consulting, contracting, etc.
2. Accounts payable is a way to raise capital for a business
Some contractors provide services to large oil multinationals like Chevron, Shell, and ExxonMobil. But they are not paid upfront. Despite all the money these big companies have
Typically, a supplier must wait between 30 and 60 days (or longer) before being paid for goods or services they have already provided to these corporations.
And everything is completely legal. It is referred to as “Accounts Payable” in accounting. Not just international corporations that engage in this. Almost every major business in the world delays paying its suppliers.
The same approach is employed by certain retailers. In fact, the majority of B2B suppliers are accustomed to this behaviour and are aware that they won’t get paid right away.
It’s interesting to note that postponing payments can benefit the supplier’s operations because they can increase sales when they offer credit.
3. Business loans from banks
Banks receive funds from depositors and savers and disburse those amounts to individuals and organisations who borrow the money and pay the bank interest to use those funds.
In actuality, banks are experts at generating profits using the money of others.
And if you are familiar with the game, you may employ this tactic to finance the growth of your business. However, if you don’t know how to use them, it may be risky for your business.
4. Government grants and low-interest loans are a means to raise capital for your business
Every government aspires to maintain popular support and win the following election.
But in order to do that, they must expand the economy, create enough employment, and bring in enough revenue to satisfy the public and win their support once more.
Because of this, governments all over the world give billions of dollars in grants, low-interest loans, waivers, refunds, and other forms of direct and indirect financial help to business owners and entrepreneurs.
5. Investors can help you raise capital for your business
Each and every investor is seeking a way to make a profit. They invest both their own money and the money given to them by their clients because of this.
And this is precisely how financial instruments like initial public offerings (IPOs), venture capital, private equity, and angel financing operate.
Investors won’t increase their wealth if they don’t distribute (invest) their capital.
Investment funds are, therefore, among the most significant sources of finance for entrepreneurs who want to use other people’s money to assist their businesses.
You must understand how investors think, what they seek in a business, and how to ensure you’re getting a good bargain.
With over N165 billion in subscriptions, Greenwich Merchant Bank Limited, one of the autho…