Where once the American Dream was owning your own home, it has now transitioned to owning your own business. Thankfully, in the age of technology, owning your own business is easier than ever before. One of the biggest frustrations for most small business owners is that they have to wear so many hats and be proficient at so many different things. For instance, a baker may want to own a bakery because they love to bake.
What they also have to do to run a successful bakery, however, is learn how to negotiate contracts, manage their finances and raise capital funding or get a small business loan. This, however, is one more way that technology has made life easier for small business owners than ever before. If you are looking to raising funding for your own lawn care business, here are 5 tips and tricks to help you get started.
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Get educated
The first and foremost step in starting any business is to learn as much as you can about the industry are starting a business in, the market you are dealing with and even about business in general. Small business owners have to wear a wide variety of hats, so you need to know a little something about a lot of different fields. These can include marketing, accounting, recruiting and negotiating contracts, just to name a few.
Once again, however, technology has made it easier than ever before to master all the skills you need to master. Not only are there an almost limitless number of online courses available (both paid and free) but programs like Quickbooks or Office 365 can help you quickly become a marketing and accounting pro even without a degree.
Develop a solid business plan
Like the old saying goes: if you fail to plan, plan to fail. There are a number of different resources available to help you develop a business plan, but many of them make it more complicated than it really needs to be. Of course, how complicated your business plan needs to be also depends a great deal on how complicated the business you are starting is or how much funding you need in the first place. The more capital you need, the more comprehensive a business plan needs to be.
In essence, however, a good business plan really only consists of answering two pressing questions: how much money do you need and how are you planning on paying it back? This is where some understanding of the market will come into play. For instance, let’s say that you are a homeowner in a certain neighborhood that is already serviced by a lawn care company.
If the entire neighborhood is displeased with, but that company is their only option, this represents a market opportunity. The bottom line is, the most important element of a good business plan is showing lenders or investors that you have a solid, legitimate plan for paying them back. That plan starts with telling them who your customers will be and why you feel they will become customers in the first place.
Talk to family and friends
The primary goal of raising capital for any time of business is to raise money without doing one of two things: paying too much in interest or giving away too much of your company. Generally lenders will loan you money, but the more of a risk they consider the loan to be, the higher the interest rate they will charge you.
Investors will often offer you a much lower interest rate, but they generally want a stake in your company. Sometimes, this can actually be a good thing if they have a great deal of business experience, but in other cases it can become a nightmare.
Your best option for funding your business is to first approach family and friends. Since they already know you, you don’t have to work as hard to convince them of what you are capable of. For the most part, family and friends will also not charge you high interest rates or demand a large stake in your company. This is not always the case, however, so just like all lenders or investors, make sure their expectations are reasonable before accepting any funding.
When it comes to family and friends, it is also a good idea to have written contracts. Written contracts are important for any financial transactions, but people often forego them for family and friends. This is a mistake. Make sure expectations are clearly laid out on paper and signed by both parties. Preferably in the presence of a notary.
Consider crowd funding
Another advancement in the technological age is the ability to seek funding from total strangers via the internet. If you have a solid business plan and already have some money raised, there is a good chance you can get a healthy infusion from the general public.
This is particularly true if you are charismatic and can communicate your business plan in a way that makes others enthusiastic about it as well. If not, you may want to hire or enlist the aid of someone who can. Remember, if you don’t genuinely believe in your product or plan, it’s unlikely anyone else will either.
Keep in mind, you don’t have to fund your business from a single source. In fact, realistically, you probably shouldn’t. The more of an investment a single person or entity makes, the higher their expectations will be regarding a return on their investment. Let’s say you figure out you need $10,000 to start your business.
If you can raise $2,000 from your family and friends, that gives you essentially a $2,000 “starter” on a crowdfunding campaign. One thing to realize about crowdfunding is that people literally follow the crowd. Raising the first half of your funding is almost always far more difficult than raising the last half. Once people see other people “buying in’ they will buy in too.
Approach traditional lenders or investors
One mistake that many entrepreneurs make is approaching traditional lenders or investors first. The problem with this is that to them you are an as yet unknown quantity. The reason you want to approach family and friends first is that they know you.
If they believe in you enough to invest in your idea, then there’s a good chance others will as well. If your own family and friends don’t believe in you, however, there’s also a good chance you’re going to need to do some more work to convince others. This doesn’t mean you can’t get small business funding if your family doesn’t believe in you, it simply means the more backing you have prior to seeking traditional funding, the more likely you are to get that funding at a lower price tag.
Remember, lenders and investors assess risk. They aren’t a charity, they are looking for a return on their investment. The principle rule of investing is high risk = high reward/ low risk = low reward. The less of a risk they feel they are taking by loaning you money, the lower your interest rate will be, which means you will have less to pay back.
The same is true of investors. The less investors feel you truly need them, the less of a stake in your company they will get. The more desperate you are for investors, the more of a share in your company you can expect to kiss goodbye.
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