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7 Ways to Raise Business Capital

One of the key reasons people start their own business is to earn more money, and have greater control over it, but raising capital to invest back into your business can be far easier said than done. Capital is the lifeblood of any business, essential for both starting up and scaling operations – and acquiring more of it takes research, patience, expertise in your own space, and a willingness to take on risk. Here are seven ways you can raise capital to help grow your business.

1. Grants and Loans

Government grants and loans are more traditional capital-raising methods that support both new and established businesses. While grants offer non-repayable funds, loans require careful consideration due to potential fluctuations in repayment amounts caused by variable interest rates, and of course your business’ ability to service any loans. As a business owner, it is advisable to engage a finance broker and accountant to ensure any loans you take out for your business are not only competitive in terms of rates and repayments, but also fit into your overall business strategy. The Australian Government has published a list of business grants and programs, available here.

2. Saving

Often overlooked, disciplined savings can be a straightforward and risk-free strategy to raise business capital. By minimising external spending and reinvesting profits, businesses can strengthen their financial footing without accruing debt or sacrificing equity. This approach fosters sustainable growth and keeps full control in the hands of the business owner – no dilution of ownership or tricky paperwork and red tape!

3. Private Equity and Seed Funding

If you are fortunate enough to have access to affluent networks, private equity and seed funding can present a viable avenue for capital raising for your business. The ideal investor not only brings capital but also shares your business vision, offering invaluable mentorship and guidance. This synergy is vital as it ensures both you and the investor benefit from the growth and success of the business. However, entrepreneurs must understand the risks involved, such as the potential dilution of ownership, and establish clear terms with investors to safeguard mutual interests.

4. Angel Investing and Venture Capital

Angel investors and venture capitalists are pivotal for businesses that require significant early-stage funding. While angels are typically individuals investing their personal funds, venture capitalists are firms looking for businesses with high growth potential. Both options involve equity exchange and are suitable for businesses aiming for rapid market penetration and expansion. A key difference between angel investing and seed funding is that angel investors often come into the picture while a business is still in its very early startup phase, while seed firms typically come in once the business has decent traction and proof of concept.

5. Mergers and Partnerships

Capital shortages can often be addressed through strategic mergers or partnerships, especially among businesses within the same industry facing similar challenges. This method not only broadens market access and client bases but also facilitates the sharing of resources, ideas, and operational spaces. While mergers offer substantial financial leverage and growth potential, they require thorough consideration and alignment in business philosophy and goals.

6. Business Accelerators

Accelerator programs provide a blend of mentorship, resources, and funding to nurture startups and expand small businesses. These programs are designed to accelerate growth through structured guidance and direct capital support, making them an excellent choice for businesses ready to scale quickly. There are a number of accelerators in Australia, and each one is unique in terms of what they offer and what they seek in return (click here for an overview).

7. Crowd-Sourced Funding

Crowdfunding allows businesses to raise money through investment by members of the public, typically in exchange for early access to a product or other rewards. Kickstarter is an example of this type of service. Crowdfunding can be beneficial as it taps into a broader investor base, ranging from small-scale individual investors to more significant wholesale investors, providing a flexible funding solution that adjusts to various business needs and growth stages.

McKinley Plowman: Supporting your Business Journey

Raising capital is a critical aspect of business growth and sustainability. Australian business owners have multiple avenues to explore, from equity investments and partnerships to more traditional loans and grants. Each method comes with its risks and benefits, requiring a tailored approach to ensure it aligns with your business’s goals and operational model. By strategically choosing the right type of capital to raise, you can position your business for successful expansion and long-term profitability.

The team at McKinley Plowman are on hand to assist you in raising capital in a way that is appropriate for your stage of business, your risk tolerance, and the avenues available to you. If you’re ready to see how we can accelerate your growth, call us today on 08 9325 2411 (Perth), 08 9301 2200 (Joondalup), or contact us via our website.

written by:

Donna Morrissey

In her over 20 years in public practice accounting, more than 15 of which have been spent in management positions, Donna has worked with a diverse range of clients across a number of industries. She combines her experience with a Bachelors of Business (Accounting), Certified Practicing Accountant (CPA) qualification, and Associate Diploma in Accounting to deliver outstanding results for her clients.

Donna leverages her breadth of knowledge to provide compliance tax work, business advice, tax planning, cash flow forecasting, and much more - meaning clients get the right systems in place so they can focus on running their business, and she loves being a part of their business growth journey.
When she’s not working hard for our clients, you’ll find Donna stand up paddle boarding, cooking, taking her dog for a walk, or travelling!