5 Ways to Raise Money: Manage a Shortfall or an Opportunity

There’s a good chance you’re looking for new and improved ways to excel in your business when you’re a business owner in this day and age. Everything moves at a much faster pace, and if you don’t keep up, you could fall off the radar. The problem with this is that nothing in this world comes for free, and you’ll need to invest a considerable amount of money into your business if you truly want to take it all the way. It doesn’t matter what kind of business you run, whether it’s profit or non-profit, the same rules apply to each. And, sometimes, you need to raise money quickly to either manage a shortfall or take advantage of an opportunity that won’t last.

But finding extra cash to invest in your business isn’t easy. However, it’s not impossible either, and with these clever techniques, you could find yourself pushing your business right to the top. With that in mind, let’s take a look at these smart ways of injecting extra cash into your business.

raise money

How to raise money fast

Well, it’s not really a strategy to raise money fast, but it’s a strategy that limits your need to raise money fast. It’s accurately forecasting and building an accurate statement of cash flow. This financial statement should be part of your yearly business planning process so you can anticipate shortfalls long before they happen. When you detect a shortfall in the planning process, you don’t have to scramble to raise money fast, which inevitably takes resources and/ or means paying higher interest than when you have the luxury of time afforded by accurate planning. The same goes for opportunities that might require an unexpected influx of cash. If you did your research when you put your yearly business plan together, you could predict the potential for most types of opportunities, so expenses associated with taking advantage of the opportunity were built into your budget already.

Of course, the unexpected arises sometimes and you must raise money quickly. Here are some things you can try when money is tight and you need more unexpectedly.

Revenue is your best option

In all cases, revenue is your best option to raise money. It’s the only thing that brings “free” money into your business to pay bills and help your business grow. Never count on other sources of money on a routine basis as equity and borrowing come as a serious cost. Just as your family thrives when you live within your means, your income should support your business except when extraordinary factors intervene.

When you face a situation where revenue won’t cover your expenses or you face an unexpected opportunity, first consider ways to self-fund by improving cash flow. For instance, you might consider factoring. Factoring involves selling accounts receivable to a financial company at a discount. When the debt is paid, the financial company makes money because it pays you less than the money owed. Of course, factoring doesn’t work for all types of companies and it’s hard to factor consumer debt (it mainly works when you have large receivables from companies) and doesn’t work when you get paid in cash as you have no receivables.

An alternative that works well for consumer companies is to reduce prices to get rid of inventory and raise the money needed for other things. This is sometimes one of the best ways of making extra money quickly, especially when having flash sales within your business. Weigh up the pros and cons of having a sale where items “fly off the shelves” and ask yourself if you can really commit to price crunches like that.

coupons and discounts
Copyright: ogonkova / 123RF Stock Photo

One thing you’ve probably already picked up on is that people can’t resist sales when they think they’re getting something for much cheaper than they should. Consider having a few of those sales to raise some extra cash to take your business even further! Beware, however, to use this tactic sparingly or you’ll see your sales drop precipitously when items aren’t on sale as you’ve trained consumers to wait until your next sale before buying.

Look into crowdfunding

As you’re probably already aware, money can be very hard to raise in today’s world, especially with the way the economy is. No one has loads of spare cash that they can just give away – especially not for any old cause. However, crowdfunding is an incredible way of raising money through people who are interested in supporting your cause. Crowdfunding also works when you have a unique product or some other incentive to offer those who support your business with cold, hard cash. Changes in security laws in the US also allow more folks to invest in your business in exchange for equity, something impossible in the past as investors faced stiff financial requirements to invest.

Crowdfunding works by asking folks to donate small amounts to fund your non-profit goal or to invest in your company in exchange for stock or merchandise once the company launches. So, you might need X amount of money to launch that line of t-shirts or to send a package to war victims – these will be your financial target, which is displayed to visitors on the crowdfunding website. Once you raised that amount of money, you get the funds and use them for the designated purpose. For businesses interested in profit, you often offer products or some other incentive given to those who contribute.

As you can see from this description of crowdfunding, you need to be careful when it comes to using crowdfunding to build a profitable business. First, you need to promote your crowdfunding effectively. Second, you need to ensure that the cost of promotion and promised incentives are covered by the amount you requested. That said, many people have successfully launched campaigns, and it’s an option to consider for your company too.

crowdfunding marketing campaignConsider peer-to-peer lending

Another aspect to consider is reaching out for some help with funding your endeavours. If you’re running a profitable business, you may ask for small loans that you’ll repay through future profits from your business. But if you’re running a non-profit organization, you should take the time to learn the basics of peer to peer fundraising before committing to anything because like all kinds of funding options, it comes with cons as well as pros.

Aside from that, it can be a great way to get funds from people who really believe in your cause, whether it’s fellow people who want to raise money for cancer or people who love to look great wearing your clothing line.

Fast finance options

Sometimes, asking for donations might not be an option, or perhaps you’re not raising the kinds of funds you’d previously imagined. It’s time to start thinking about finance options that can get you money quickly. You’ve probably heard of payday loans, but they aren’t going to get you the kind of cash you’re after and won’t provide you with the length of terms either.

Instead, you should look into cash flow finance options. It’ll allow you to get a higher amount of money to play with, without worrying about not having the funds to pay it back yet. Again, make sure you look into the pros and cons of cash flow finance options to make sure you can afford the repayments and the dent it might have on your business.

Host a fundraising event

Another fantastic way of raising money for your cause in a short amount of time is by hosting a fundraising event. This works a lot like crowdfunding, but instead, you’re face-to-face with your customers (and potential customers). You’ll need to create a campaign to set your fundraising theme, and you’ll need to invite other businesses to get involved, too.

You can have face painting, stalls, rides, and other fun activities to encourage people to donate funds to your cause. Or, if an event like that isn’t your style, you could ask for donations to do something larger, like go skydiving, and see how much you make there.

While fundraising works best for non-profits, a for-profit business that offers something needed in the community might use a fundraiser to help them out of an extraordinary situation, such as recovering from a natural disaster or the serious illness of one of the principles.

Conclusion

These are some ways to help your business or non-profit when you face an immediate need for money. Certainly, none of these should be a normal part of your business, or it will stop working.

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