The economy is going strong, and yet many people are worried about the future. Why?
There are many reasons for this fear, but one of them is that many businesses need capital to grow or even stay afloat. With unemployment numbers at an all-time low, and wages increasing across the country, it’s time for business owners to take advantage of these great economic conditions by seeking alternative methods for raising funds or increasing capital.
Here are three popular options for growing a business and raising capital fast that you can compare:
Timeline: As short as two months
Franchising creates a national presence for the business, with an existing “brand name” known to customers. Franchising is an opportunity to get in on the ground floor and develop a business with stable financing.
Franchisees receive support from the national marketing and advertising of the franchisor. This allows a single operator to have access to more customers than they could get on their own. There is no risk of loss of intellectual property. The franchisor has already invested heavily in product development and support. The franchisee can capitalize on this.
Franchising is a close relationship with the franchisor, using their business model and support system. The franchisee learns by doing, has a guide to help them grow their business, and accesses a much larger potential customer base.
It provides a business model, management training, and ongoing support programs to franchisees. This includes a wide range of training programs, ongoing training events and conferences, leadership seminars, marketing and advertising support, and much more.
Franchising allows entrepreneurs to maximize their potential. Individuals of all ages and backgrounds can own a business without the risk and capital costs of starting a stand-alone business. Franchising provides opportunities in both traditional and nontraditional areas. A franchisee can be either an employee or an employer.
Lastly, contrary to popular belief, it provides an opportunity to get started with little or no investment. It also keeps the risks low while building a solid business. While some people make their first million dollars in a year, most will take much longer. However, the potential to achieve success is unlimited.
- Small Business Loans
Timeline: Around 45 days for SBA loans
Small business loans are discounts on current operating capital, giving your business the money it needs to grow and survive. Loans are unsecured, so you don’t have to give up any assets such as real estate or inventory to get them.
They are easy to apply for, streamlined, and often processed in a few days or less. Rapid loan approvals allow you to make an immediate impact on your company, increasing productivity and profits.
Loans are often at lower interest rates than personal loans, allowing the business owner to use the entire amount in operations rather than paying off the interest. They make it easier for small businesses to compete with larger corporations.
SBA small business loans are often flexible, allowing you to get just the money you need for what you want. You can use it for anything from inventory or supplies to employees and marketing.
Unlike bank loans, whether a small business is eligible for a loan comes down to cash flow and credit rating, not collateral. In many ways, it’s easier to get a small business loan than a mortgage. The lender doesn’t have to be concerned about getting their money back if you lose your house.
Business loans are short-term, so the cash is there when you need it most. It’s just a simple matter of writing a check. Your business doesn’t have to justify or document where that money goes. Instead, they can spend it on whatever it needs to run smoothly and profitably.
Timeline: between 1 and 60 days, on average
Crowdsourced funding platforms are another way to raise capital. They are basically a platform that allows entrepreneurs to seek investments through online campaigns, generally from individuals interested in investing in small businesses or startups.
This is often called equity crowdfunding because the investor gets a percentage of ownership in the company instead of receiving interest on their investment like a loan. However, there is now some equity crowdfunding of debt rather than equity due to the recent passing of the Jobs Act in 2013.
Let’s say you have an idea for a new sportswear line and need some startup funds. You pitch the business plan on Kickstarter or Indiegogo.com and make a video pitch, showing who you are and why you think the business will succeed.
You post your project on these websites and solicit funds from anyone with $25 or more to invest. If you meet your goal (the minimum money needed), those backers get a share of ownership in the company.
Raising capital is not a fun topic, but it is one that every business owner faces. Otherwise, the consequences of not doing it can be far worse. Fortunately, you can now compare many ways to grow a business with little capital outlay.
Meta title: Fast Ways to Finance a Growing Business
meta desc: The economy is recovering, so now is a good time to grow a business. Here are three options to add more customers and profit and raise capital fast.