Funding Pitfalls Small Business Owners Must Avoid
At some point, most entrepreneurs, business owners, and organizations need to raise money to keep the business growing.
Fundraising can be for starting a new business, rehabilitating a business that’s experiencing a cashflow problem, expanding an existing business, and many more situations.
Here’s how to begin the process of raising funds for your business and how to avoid common pitfalls as you get started.
Determine Your Fundraising Goal
As an entrepreneur, you’re probably wondering how make your dream business a reality when the competition is seems tough. There are new ideas, apps, websites, patents, products, and services launching all the time.
Fundraising to get your idea off the ground might seem complicated, but it’s still possible. Ask yourself how much money you need to raise. What amount would make it easier for you to have the programs, systems, and perhaps team members to run your business properly?
A good starting point might be to raise enough money for 12 months of activity. That number could be less than you think!
In the class “Edit Your Biz on a Budget” in the Life Editor Clubhouse, I walk you through the steps of setting up your business in a streamlined, inexpensive way.
So what types of things will you need money for? This may include your website, hosting, office equipment, rental space, wages, software, etc.
Are you going to need labor? If so, what are the costs involved? Here’s how to calculate and lower labor costs.
Start Small and Simple
When fundraising for your small business, ask yourself these questions:
- How much money should I raise for the startup process and working capital?
- How much money do I have now and how much money am I willing to risk?
Once you have a list of all the investments you need to make to start the new business, you should add an additional amount from 12% to 15% as a buffer. You’ll almost always need more money than you think!
Most businesses don’t make a profit in the first few months, and you’ll still have to handle fixed expenses or one-time expenses. Without money available, your business can’t move forward.
Many startup business owners choose to apply for loans to help cover cost. And investing in yourself and your success is always a good idea.
You may choose to apply for a business loan from a bank (this is the cheapest and usually the fastest way to get the money you need) or financing funds (some work with the banks and some provide the loan outside the bank).
Plan Your Advertising Budget
In my Startup In 60 program, we discuss why marketing is essential to any business because no one will buy from you if they don’t know you exist.
Research advertising that’s relevant to your field such as Facebook ads, Pinterest promoted posts, Google ads, etc. Keep editing and tweaking your ads until they’re giving you a good return on investment. Play with the audience demographics, budget, images, etc. until you find the sweet spot that leads to sales.
Remember to show your audience relevant ads that offer solutions to their problems.
Take SEO Seriously
If your business lands on the first page of Google when a potential customer searches for your products or services, then you’re golden! SEO (search engine optimization) can help you stand out.
Organic SEO is crucial for businesses because it allows you to rank in the Google search results and be exposed to an audience that didn’t know about your business.
Publishing your website is only the first step, and you’ll need to use keywords people are searching for to get the traffic that leads to sales.
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