A money exchanger counts US dollar banknotes in Istanbul, Turkey on May 23, 2018. (OZAN KOSE/AFP via Getty Images) Have you finally decided it’s time to launch your own business? Is it time for your existing business to expand? Or, do you need to offset losses from economic downturns or the unexpected, like COVID-19?
If you answered yes to any of the above, then use the following 15 ways to raise money for your business. If you’re able to swing this, then funding your business yourself is hands-down your best option. Besides not having to deal with interest or equity stakes, you can also play by your own rules. 1. Add An Additional Income Stream
Yeah. I know. You might be thinking that this is easier said than done. But, it is possible.
One suggestion would be to live below your means. That’s just another way of saying not to spend more than you’re bringing. For example, if your take-home pay is $5,000, try to stay around $4,000. That extra grand can be invested into your business.
Your other option? Earn more money.
If you’re currently employed, then ask for a raise or work overtime. If you can manage it, start a side hustle until you’ve earned the money you need for your business.
Ideally, you should work towards passive income. You’ll put in the work upfront, but then it requires little effort to keep the cash flowing in. Earning a passive income usually comes in the form of the four following types: Buying cash-flowing assets, such as real estate or investing.
Building assets, think creating an online course.
Sharing or selling assets that you already own.
“Reverse” passive income where you reduce spending.
Want specific examples? Then check out some passive income ideas ? 2. Sell Personal Assets
An accessible way to raise money for your business is by selling some of your personal assets. Don’t be forced to part with anything that you don’t want to. But, you could try the Marie Kondo (Japanese organizing consultant) method and ask if certain items spark joy. If not, sell these items online or have a yard sale.
That might not bring in a ton of money. So, if you need to raise more money, consider your expensive items. I know people who have sold their cars to raise money, and either bike or walk to work.
For longer commutes, they use public transportation or a ride-sharing service. In addition to making money from the sale of the car, they also don’t have to worry about recurring expenses like insurance, registration, gas, and maintenance.
You can also sell stocks, bonds, real estate, and high-end electronics. You may even want to downsize your home or at least borrow a home equity loan. 3. Raid Your Savings
Another accessible way to fund your business is by withdrawing whatever you have in a savings account. I get that you worked hard to bolster your savings. But, it’s investing in your dream or passion. If you have confidence on your business, you can replenish your savings when your business takes off.
If you have a Roth IRA, you’re able to withdraw your original contributions tax- and penalty-free. If you withdraw from a traditional IRA or employer-sponsored retirement account expect a 10 percent IRS penalty plus the back taxes that you owe from when you made the original contribution. 4. Borrow Startup Capital from Friends and Family
Don’t have enough cash on hand to invest in your business yourself? No worries. Rather than bootstrapping, borrow the money you need from friends and family.
From my personal experience, you might want to tread lightly here. Money has the ability to permanently fracture even the closets of relationships. However, this is still a tried and true tactic if you need a small amount of money.I think it’s important to keep this as professional as possible. It’s a simple way to keep your personal and professional lives separate. Also, it shows that you respect them. So, when approaching a friend or family member, keep these pointers in mind: Prepare a business plan, financials, and other documents as if you were meeting with a lender from a bank. Ask for their feedback instead of just bluntly asking for money. Don’t take it personally if they decline. A lot of people live by the “I never lend money to friends or family” mantra. 5. Borrow from Your Credit Cards Yes. Credit cards do come with exorbitant interest rates. As such, using your credit card can make it a challenge to […]
Protected by Patchstack