Raising Capital

Once a business plan is in place, the next step is raising capital - money or goods used to operate and develop a business - in order to see that idea grow into fruition.

Companies are encouraged to begin raising capital early, since securing funds for a new business can often be a lengthy process. When figuring out how much money to raise, companies will often consider the basics needed to get off the ground, but should ask investors for more than that, leaving leeway for factors and expenses that were forgotten or unexpected.

Next, entrepreneurs have to decide where to get capital. Grants can take up to a year to get awarded, while bank and small business loans have a faster turnaround (2 to 3 months). However, both are increasingly harder to secure these days in a depressed American economy. As a result, many entrepreneurs and new businesses have turned to the idea of finding angel investors.

Angel investors, or wealthy individuals who provide their own funds and expertise, are another source of start-up capital, which has gained in popularity over the past decade.

Angel investment does have its pros and cons though, as while they are usually willing to take high risks, the amount of money is generally lower, whereas venture capitalists or a pool of investors that take shares in the company, will invest greater amounts but usually only after the company has proven growth.

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