How To Raise Money For Your Business

A roll of $100 bills

Money is like oxygen. And the flow of money is like breathing. You need to breathe to live. And you need the flow of money to keep your business alive, right? Pretty simple.

But what happens if you get too much or too little air? Too much oxygen can make you delirious or light-headed. Too little, and you become unconscious — or it kills you.

Too much money is unlikely your challenge currently. After all, you are reading a post about how to raise money for your business (and it unlikely that it is stretch to assume you need it fast.)   But there are challenges associated with too much money, like the dangers of deep pockets where everyone declares they’re (or: everyone pretends to be) your long lost relative. I will save that discussion for another post.

I assume you are oxygen deprived and need to raise some money fast. If you have too little money and need some fast, you are oxygen deprived. The good news is that there are ways to get money quickly, when necessary. Like oxygen masks on a plane, these funding sources are available for an emergency — not as your primary source.

Here are the best ways raise money for your business, plus the pros and cons of each approach:

Credit Cards

Those little plastic cards can be the easiest way to raise money fast, but it comes with risks.  You know, like overwhelming credit card debt.

Credit Card Pro: Easy access. Ever wonder why they call it swiping when you use your credit card at the store? It’s as simple as taking candy from a baby. You’ve got a line of credit — interest free — for approximately 29 days each month. Plus, you’re adding oomph to your credit history and rating — if you pay the full balance before the due date.

Credit Card Con: The interest rates on most credit cards are astronomical. If you don’t pay the balance in full before the due date, you’ll be charged sky-high interest rates.  But it gets worse, credit cards play into our bad habit for instant gratification.  Get now (swipe the card) and worry later (the statement arrives at your house).  To relieve the pain of paying the statement, we look for some instant gratification. . . and we swipe the card again.  So dangerous.


Offer Pre-Pay Discounts for Clients

You can raise money for your business by simply picking up the phone.  Call existing clients and offer a discount if they prepay for any services.  Often the year end is the best time to do it, since many companies are looking to add some last minute legitimate expenses to reduce their tax liability.  They pre-pay and while you make a little less profit, you get the money up front.

The Pre-Pay Pro: Clients have grown to expect offers like these, and are likely to jump on the opportunity.  Heck,  Groupon offers pre-pay discounts on everything from bobsledding lessons to Chinese take-out to Brazilian (and manzilian) waxes.

The Pre-Pay Con: If done wrong, the customer may think your business is in trouble. (Even if you don’t offer manzilian waxes.)  And don’t forget this is a quick fix for your financial situation.  Ultimately you will have the cost of delivering what customers pre-paid you for.


Sell the Stuff You Don’t Use

This is likely my favorite solution to raising money.  I am always surprised how much unused stuff I have in my office. Stuff that I will never use, and is just distracting me.  This method is all about turning clutter into cash.

Clutter Into Cash Pro: Get rid of stuff you don’t need so you have money and space for the things you do need. Online classified ad sites, such as eBay and Craigslist, are quick and easy to use.

Clutter Into Cash Con: Don’t get carried away. Selling a copier that no longer suits your purposes is good. Selling your wedding ring is not.  And clutter is a scarce resource, once it is gone it is gone. Unlike your ability to deliver a service, that (in theory) is unlimited.


Family Funding

Old Uncle Bob is good for more than just awkward jokes and uncomfortably long hugs.  He could be a source for free money (usually). Just be aware of the dicey dynamics — proceed with caution.

Family Funding Pro: Get the funds you need at low or no interest. Get it fast without the need for lawyers or contracts or any of that.  But that being said, a written agreement is always a good idea even with – scratch that, especially with – family.

Family Funding Con: If you fail to repay the loan on time, or if even the smallest expectation is not met, it can destroy a family relationship.  Think turkey leg being thrown at you at Thanksgiving dinner.  Or worse, think of an even longer awkward hug from Uncle Bob.


Factoring Companies

Factoring companies are like specialized banks.  They give you much needed cash immediately  in exchange for your accounts receivable.  Just watch out for the high costs associated with getting money 30 or 60 days earlier than your AR department would.

Factoring Pro: You get money fast when a factoring company “buys” your accounts receivable.  Instead of waiting for your client to send you money in a month or two, you get it now and the factoring company handles the accounts receivable.

Factoring Con: You pay a big percentage of fees to get money 30 or 60 days early.  And, factoring companies are not collections companies. They will not prepay you for any AR that is not likely to be collected.  And if they can’t collect the money, the problem is yours to get it.


Fire Sale

When you really need money, you can have a big sale.  If you can get the word out, you can motivate both past clients and new prospects to buy now.  The trade off, of course, is your profit.

Fire Sale Pro: Similar to offering clients a discount to pay now, you offer prospects a big discount up front — and get some capital now.

Fire Sale Con: If it comes across as needy or desperate, your reputation may get burned. Properly positioned, a fire sale won’t torch your brand.


Your Money for Your Life (insurance)

You life is in fact worth a lot of money, and when it comes to the eyes of lenders, your life insurance is where the cash is at.  You can borrow (or even sell) your life insurance.  Know that if you consider this approach, the trade off is your family’s financial security in the long wrong.  A risky bet, by any measure.

Life Insurance Pro: If you have a whole (rather than term) life insurance policy, it can be a hidden source of cash. You can take out dividends and/or the accumulated value without having to repay it.

Life Insurance Con: May not be an option, depending on your policy. Check with your life insurance agent first. You don’t want to jeopardize your coverage — or leave your loved ones chipless when it is time to cash it in.


Sell Part of the Business

You can get lots of necessary cash, and another person(s) involved in making the company grow.

Sell A Piece Pro: You can get much-needed money and a business partner.

Sell A Piece Con: You get a business partner.


No matter what option you choose, you need to have monetary discipline. While you get money up front and fast, it also means that you won’t get the money later. This big infusion of oxygen will bring you back to life, but now you need to have the discipline to breath normally again.


7 thoughts on “How To Raise Money For Your Business”

  1. Obviously we can raise money through bank loans, angel investments and VC funding. But those paths almost always take a lot of time. Do you disagree? Are there other ways to raise fund fast that I didn’t mention?

Leave a Reply

Your email address will not be published. Required fields are marked *

More of mike…

Have Mike Speak at your event

Read All of Mike’s amazing Books

Listen to Mike’s Podcast Right now

Join Profit First Professionals

…& Mike’s Books

Profit First


The Pumpkin Plan

The Toilet Paper Entrepreneur