Many startups and businesses dream of landing funding from angel investors and venture capital. However, very few businesses ever acquire venture capital funds.
Most people who start businesses today differ from the stereotypical image of a business owner. Increasingly, entrepreneurs are female, older, changing careers, and racially diverse. Unfortunately, these atypical visionaries are unable to connect with people who control capital and investing.
However, there are many other ways to create cash flow for your company. For example, business owners can focus their skills on creating value instead of relying only on venture capital. By being creative, thinking outside of the box, and allocating your time and money correctly, you can still grow your business.
The changing face of entrepreneurs and business owners
Women-owned businesses represent about one-third of all small businesses in the United States. As more opportunities appear for women and minorities, this number is bound only to increase. However, many women, especially in the face of the pandemic, have been particularly vulnerable to financial hardship. This is also true for racially diverse business owners.
One issue is identifying who these non-traditional entrepreneurs are, which can make it harder for them to acquire funding. For example, an initiative in Vermont sought to identify 10,000 women-owned businesses by the end of 2022. Meg Smith of Vermont’s Women Fund remarked that “money came into the state earmarked for women and minority-owned businesses, and there was no way to find them.”
These types of initiatives are important for underrepresented groups to locate funding. Online surveys show that 37% have no emergency savings, which demonstrates the financial vulnerability of many Americans. This vulnerability is why business owners need to think of creative ways to stimulate cash flow and money for their businesses.
8 ways to attract more funding for your business
Often, one of the key metrics for the health of a business is how much cash it can generate. Let’s take a look at creative ways you can attract funding and resources for your business.
1. Collaborate and find mentors and colleagues
One of the greatest tools you can have in your business toolkit is a group of solid mentors and colleagues to provide you with insight and guidance. These people are often someone you have known for a long time, or they can be a relatively new acquaintance in your life. Either way, look for people who are already successful.
These mentors don’t have to be in your industry, but they should provide you with a model for achieving success. By finding someone you trust and can confide in, you’ll be able to develop yourself better. Personal development and access to your mentors’ networks will give you access to all kinds of resources you otherwise might not have.
2. Embrace social media and digital marketing
No list would be complete without discussing social media and digital marketing. Social media is one of the best and cheapest ways to attract attention for yourself. For example, TikTok, one of the fastest-growing platforms currently available, provides business owners ample opportunities to connect with leads and drive sales. Best of all, you can do much of the work on your own by creating simple and fun videos.
3. Focus on what you know
Focusing on things you already know and understand is a great way to grow your business. There are a lot of guides that can help you get started, but the key here is to find an area that matches your skillset. Maybe you worked as an HR manager and want to become a consultant? Either way, if you focus on areas you already understand, you will know how to locate the resources necessary for that industry.
4. Stay educated and never stop learning
Being educated is key. One of the biggest struggles facing business owners is that they simply lack the education or know-how to accomplish something. Fortunately, there are many online resources available that can push you in the right direction if you get stuck. The greatest asset most entrepreneurs have is a desire to succeed – use that, and keep yourself learning every day. By growing your skills, you can identify new income streams, ways to save money, and other ways to help your business.
5. Identify a big vision and build towards it
Sometimes businesses think too small. They only focus on small details or what they are already doing. But identifying a larger goal can help you get on track to achieving it. First, establish a big vision, and then make small steps towards achieving that goal. Having a great elevator pitch can help articulate that vision to others.
Once you have a vision in place, you can identify the next logical steps in building up to that vision. It is one of the best ways to achieve growth!
6. Protect the equity in your company
Equity is the most valuable asset for the largest businesses on Earth. The same is true for the smallest business too. Equity is ownership, so that means you should treat equity-like gold. Don’t trade it for resources and services you can pay for. Equity ownership should be reserved for people and resources that are invaluable.
7. Leverage technology to track expenses and generate invoices
Another key way to use unconventional resources is to use software and other technology to manage your budget. Consider using tools like Freshbooks, a Quickbooks alternative that can track expenses and build invoices to send to customers.
Remember, smart financial planning begins with saving your money and managing your income. The likelihood of ever receiving venture capital money is slim, but smartly tracking your expenses and cash can help your business allocate its own capital better.
8. Find alternative funding streams
Finally, consider alternative funding sources. Venture capital may be out of your reach, but a small business loan could give you the funding necessary to expand your business. Earlier I discussed thinking big, but before you can be big, you have to act big. For example, a small business loan could give you the capital you need to open a second location. This small step is far better and more reliable than using venture capital money to open 10 new locations at once.
Remember, these opportunities for alternative funding are increasingly available for women and minorities. So keep on the lookout for opportunities targeted at your demographic.
As more and more people take on entrepreneurship and business opportunities for themselves, it’s important that they consider alternatives to venture capital and angel investors. By being creative and expanding your skills, you can help create a stable, more secure financial future for your business. This type of growth is far more reliable and avoids the pitfalls of venture capital funding.