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Entrepreneurship – How to Raise Capital

Put simply, capital is the amount of money that a business has available to spend on whatever activities deemed necessary. For the average entrepreneur, raising this capital in order to start their business is the single most difficult task they must undertake. While to many it seems to be an insurmountable hurdle, there are a variety of methods available to them to raise capital for their business. As long as they are patient and stay determined, entrepreneurs are all but certain to achieve their goals.

The first and simplest method of raising money is the one that people looking to start their own business are most reluctant to attempt at all; asking their friends and family for a loan or investment. This reluctance is understandable. After all, it feels embarrassing to ask the people closest to you for their financial support. Especially for an investment that is dependent entirely on your success and will not pay off if you fail. Regardless of what fears you might have about putting them in an uncomfortable position, asking friends and family for their money is the easiest and most reliable method of raising capital for your business. You would be pleasantly surprised how many of them would happily give a loan in order to support your dream.

Another reliable and relatively easy way to raise capital as an entrepreneur is to apply for a bank loan. Most banks are happy to provide this service for small business owners, provided they have a good credit rating and history. As long as you put together a quality business plan with all expected expenses and revenue streams, any bank will provide a loan to an aspiring entrepreneur. While you will need to pay back this debt with interest, it can help make your business seem more legitimate to other investors who are more risk averse than a bank.

The most difficult way for you to raise money for your business is through private investors or investment bankers. There are plenty of private investors out in the business world, looking for a promising new venture to invest in. If you can manage to put together a solid pitch with some guarantee of a return on the investment, finding a private investor is less difficult than many people might assume. Investment bankers on the other hand come with a different set of problems. While they are easier to obtain a loan from, this ease is because the money is raised from the public. This means that you will lose control over parts of your business, as it will be divided into shares and sold to the general population.

The final way for an aspiring entrepreneur to raise money is via a crowdfunding website. These websites allow individuals and businesses to raise small amounts of money from large amounts of people over the internet. The most well known of these websites is Kickstarter, but there are dozens of similar sites available depending on your different needs as the project starter. Some sites simply allow people to donate money while others allow loans or the purchase of shares. Either way, crowdfunding will soon be the modern entrepreneur’s preferred method of raising capital.