There are many different options your company has for raising capital. Before making a final decision, you should first consider these options carefully.
In general, there are two primary sources of funding: external and internal. Internal funding is obtained simply through the sale of your goods or services, and is the simplest way of raising capital. External capital is obtained through outside sources, which could be through stocks, bonds, and other securities; loans; private investment capital or venture capital; and a few other options. Most companies are unaware of the multitude of avenues they have to increase their most basic source of capital: internal funding. External capital can be a very attractive route, as it promises to provide you with a large influx of cash immediately. However, this can also be a very expensive way of raising capital, with interest rates and terms and conditions that require you to pay back more than the amount you borrowed, or produce a return on an investment. Optimally, successfully raising capital will use both sources in tandem for the greatest effect.
In order to raise additional internal capital, look into every nook and cranny of your company to find ways to cut expenses and increase your overall efficiency. Employees that are unproductive can be retrained or fired. Spending leaks can be closed, and streamlining across the board can be conducted to save dollars here and there. Many companies also are blind to one major way of increasing their funding: new clients. Work extensively to build new relationships and connections. Networking is vital to a business’s long-term success.
Raising capital externally will be easier if you’ve done the hard work internally your company needs, as lenders, angel investors, and others will be far more likely to help you out if you can prove your company to be profitable and efficient.
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