8 Ways on How to Find Funding Opportunities for a Business
Every business finds itself at a crossroads now and then. Whether you are just starting out or have gone through recent growth, you may find your business with a sudden need for cash.
Whether you need to secure inventory or pay growing numbers of employees, business growth requires a steady supply of income, both to meet obligations and to allow for increased output. If you anticipate a cash crunch in your future, you may be wondering how to find funding opportunities for a business.
Here is a guide on how to find business investment opportunities:
1. Determine Your Funding Needs
Whether your business needs to expand into a new office space, invest in technology or buy raw materials in large quantities, it is important to know exactly what you need before you search for funding.
Have a clear idea of the nature of your investment request—fixed or variable costs—and the total amount. This will help you to have a direct ‘ask’ when you approach potential investors or donors.
2. Get Bootstrapping
Once you have a good idea how much investment capital you will need, you need to first examine your own savings. Investment decision makers, whether you ultimately turn to a bank or private investors, will want to see that you have invested your own money before requesting additional funds.
They want to know that your own money is on the line—that you’ll work hard enough to preserve your savings and even your house.
3. Ask for Funding from Friends and Family
While it might feel uncomfortable to ask, think about turning to friends or family to borrow money for your business. If they are able to help, chances are, they will be able to make a decision quickly, will be flexible with interest rates and payback terms and they will have little-to-no bureaucratic process to slow things down.
In short, it may be worth an awkward conversation to make your genuine request. While not all friends and family would be suitable candidates, some can be an excellent source on how to find funding opportunities.
4. Think about Crowdfunding
Another potential source of capital is crowdfunding. If you decide to try this route, you will need to develop a strategic pitch in order to compete with other businesses looking for funding. With crowdfunding, you use a compelling story to draw attention to your idea.
Investors can choose to donate to your business—if they simply like your idea and want to support it—or they can invest in exchange for products / services or future investment growth.
5. Explore Venture Capital
A venture capital firm invests in small businesses, where they see a strong opportunity for growth. If your company receives venture capital funding, you will likely benefit from a large investment, as well access to expertise and mentorship. One drawback of venture capital is the tight timeline in which investors seek a return on their investment.
In addition to running your day-to-day operations, you would need answer to your investors regarding growth, profit and investment return.
6. Think About Incubation
If your business is in the early stages of development, consider working within a business incubator, which gives early stage companies access to shared space, capital, mentorship and other support. Incubators are designed to help launch new businesses as they figure out their operational models, financial plans and more.
Business incubators operate in cities across Canada, providing small businesses with the tools and knowledge they need. While some operate as a non-profit, others offer seed capital in exchange for equity.
7. Believe in Angels
Angel investors are individuals, and sometimes groups, who have a capital to invest and are willing to bet on specific business ideas. Usually, an angel investor is willing to take on more risk than other funding sources, but in exchange, they expect a good return on their investment. Many offer mentorship and advice alongside their investment, potentially an added bonus for small business owners.
8. Talk to Your Bank’s Loan Manager
While traditional banks have the reputation of being cautious with small business loans, they are an excellent resource for business owners, especially if you have a proven track record. Banks have access to large investment funds and can fast-track money, where necessary. If you decided to approach your bank for a business loan, be prepared with the documents they will need—likely a business plan for the funds and your current financial documents.
If you own a business, you have likely found yourself on the lookout for investment sources at one stage or another. Timely injections of cash and fuel growth and help things to run smoothly. Knowing how to find funding opportunities for a business can help you be ready for growth when opportunity strikes.
We hope this list of ideas has inspired you to think about both traditional and more creative possibilities for funding your business ideas.
