How to Raise Capital at Any Stage

Even with the most disciplined cost control and effective accounts receivable plan, your business may run short of cash. This is a fairly constant circumstance when you grow your business.

There are 2 key periods of capital consumption that you must consider: launch phase and growth phase. The sources of accessible capital vary somewhat during these periods. However, raising money will not come easily, nor right away.

This particular period includes the time from a day that you formulate your business idea through the first six to twelve months when you open for business. Also, you can look at the business during this phase as a "money sponge"--everything you'll be doing requires cash.

You may feel conflicted during this period about your money, and you have read and been told you have to conserve your money in early days of business, yet there appears to be a large amount of expenditures that you should make. The key question to ask yourself is: Can you pursue your advertising strategy when keeping control of your cash? If not, then you may find yourself applying to the bank for a cash advance.

There are various sources of startup funds. Here are a couple of examples:

Savings. The is most used (and most obvious) source of start-up capital. Be practical, especially when handling anything involving your own investment--why should anybody else take the financial risk on you, unless you have proved you believe in yourself with your money?

An ideal scenario is for a new business proprietor to have planned so thoroughly that they accumulate all of the seed money that is required before quitting their job and opening for business. Of course, the reality is often quite different, leading to all kinds of obstacles and misunderstandiongs as you try to raise capital. This can greatly impact the amount of cash you begin with.

Your family's help will help make your investment go further just by pitching in with necessary tasks like billing, answering phone, stuffing envelopes, doing bookkeeping, passing out the flyers, and so on.

Credit Cards. In the best-case scenario that you have very good personal credit, then you can get at least some offers of the "cut rate" cards. One common method is to give you "special introductory rate" of 6.5% to 8.0%. According to the recent financial and economic reports, this rate is under the current prime rate for those with less-than-sterling credit.

So what's the catch? The rate is usually only good for about six months, and it typically goes up after that. If it turns out you plan to carry a significant balance over six months, then you might want to reconsider the use of these "special deals".