How to Fund Your Small Business to Grow in 2023?
Discover the financial sorcery that can help your small business grow!
Small businesses play a crucial role in the economic development of any country. In India, small businesses contribute to about 45% of the country’s industrial output and 40% of its export earnings, according to the Ministry of Micro, Small, and Medium Enterprises (MSME).
If you are a small business owner in India looking to expand your business in 2023, you may be wondering, ‘How can I raise money to expand my business?’ Well, developing a strategic growth plan and identifying the right financing options are key to expanding your business.
In this article, we’ll explore the top five options for raising funds for your small business and some tips for developing a forward-thinking growth plan geared toward the successful scaling of your business venture. By exploring the various funding options—such as small business loans—and developing a clear growth plan, you can position your small business for success in 2023 and beyond.
Without further ado, let’s get started!
Develop a Growth Strategy
Before looking for financing options, it’s important to have a clear idea of your business’s growth goals. You can do this by creating or updating your business plan. Your business plan should outline your vision for the future of your business, as well as the steps you’ll need to take to get there.
Some key elements to consider when developing your business’s growth plan include:
- Market Research: Conduct market research to identify potential growth opportunities and understand your target customers’ needs and preferences.
- Marketing and Sales Strategy: Develop a plan for attracting and retaining customers, including your marketing and sales efforts.
- Financial Projections: Create financial projections to help you understand the costs associated with your growth plan and determine how much funding you’ll need.
How can Small Businesses Expand: Top 6 Options
Small business owners in India have several options to consider when funding business expansion, including small business loans, angel investors, crowdfunding, grants, and venture capital. It’s important to research and compares these options to determine which one is the best fit for your business.
Some factors to consider are the amount of funding you need, the nature of your business, and your ability to repay the loan or provide a return on investment. Continue reading to find out how to fund your small business to grow.
Small Business Loans
Small business loans are a popular choice for funding business expansion. Various types of small business loans are available in India, including term loans, working capital loans, equipment financing loans, and more.
To apply for a small business loan, you must submit a business plan, financial statements, and other documents. The lender will review your application and decide whether to grant the loan based on your credit score, the nature of your business, and your ability to repay the loan.
Some popular small business loan providers in India include banks, financial institutions, and online lending platforms. Some options you can consider are as follows:
- Banks: Most banks in India offer small business loans to eligible borrowers. You can approach your local or nationalized bank to apply for a small business loan.
- Financial Institutions: Financial institutions such as the Small Industries Development Bank of India (SIDBI) and the National Small Industries Corporation (NSIC) offer small business loans to micro, small, and medium enterprises (MSMEs).
- Online Lending Platforms: Online lending platforms such as KreditBee, Lendingkart, and FlexiLoans offer small business loans to eligible borrowers. The application process is generally quicker and more convenient compared to traditional lenders.
Angel Investors
Angel investors invest their money in small businesses in exchange for ownership equity. If you want to raise money to expand your small business, you can consider approaching them.
To attract angel investors, you need to have a solid business plan and a clear vision for your business. You should also be able to demonstrate the potential for growth and a strong return on investment.
You can find angel investors through your network, online platforms such as Angel Investment Network and Angel Capital Association, or at angel investor events and pitch competitions.
Crowdfunding
Through crowdfunding, you can raise money from a large number of people, often online. There are various types of crowdfunding options available, including reward-based crowdfunding, donation-based crowdfunding, and equity crowdfunding.
To begin, you must create a campaign on a crowdfunding platform, such as Kickstarter or Indiegogo, and set a fundraising goal. You will also need to create a compelling pitch and offer rewards or equity to your backers.
Crowdfunding can be a great option if you have a large network of followers or if you can generate buzz around your campaign. You may need to offer substantial rewards or equity to attract backers to reach your fundraising goal.
Grants
How can small businesses expand? One way is by applying for grants and using the funds to invest in the business and support its growth. Grants are financial assistance government agencies, foundations, and other organizations provide to fund-specific projects or initiatives. If your small business expansion aligns with its goals and priorities, you may be able to secure funding through a grant.
To use grants to fund your small business, research grant opportunities and identify those that align with your business’s goals and needs. You can search online databases or reach out to relevant organizations directly. Once you have identified potential grant opportunities, submit a proposal outlining your project, budget, and other required supporting documentation. The proposal should demonstrate how you intend to use the grant funds.
The grant application process is competitive, and not all businesses that apply for grants will be awarded funding. Regardless, it is a valuable source of funds for small businesses.
Venture Capital
Venture capital is a form of financing provided by firms or individuals to early-stage businesses with the potential for high growth. It can be a useful option for small businesses in India to fund their businesses and support their growth.
To use venture capital as an option to fund your small business in India, you must first identify potential venture capital firms or investors that align with your business’s goals and needs.
Once you have identified potential venture capital firms or investors, you will need to pitch your business idea to them and persuade them to invest in your company. This typically involves presenting a detailed business plan and financial projections, as well as demonstrating the unique value proposition of your business and the potential for high growth.
It’s important to note that the venture capital application process can be competitive, and not all businesses that pitch for venture capital funding will be successful. However, for small businesses that can secure venture capital funding, it can be a valuable source of financing to support and accelerate their growth.
Subscription-Based Financing
Wouldn’t it be great to secure capital without sacrificing ownership or raising debt? That’s where subscription-based financing comes in! It is a financing model in which a business regularly provides its products/services, typically on a monthly or yearly basis, in exchange for regular customer payments.
Say your customers pay a recurring fee to access your products/services. This means you have a predictable and stable source of revenue for the business, as it can count on a certain income each month or year. With platforms like BridgeUp, you can convert this recurring revenue and quickly raise capital on your terms, without outside pressure and with the freedom to grow at your own pace.
It can be useful for businesses with products/services that customers use regularly or with a high customer retention rate. It can also be a good fit for businesses that want to offer their products/services at a lower upfront cost to customers, as the fees are spread out over time.
However, subscription-based financing may not be the best option if your products/services have a low customer retention rate. This is because, in this case, the business may not generate sufficient recurring revenue to sustain itself.
Choose What Works Best for You
When seeking financial support to expand your small business in India, it’s important to find options that align with your business and its growth plans. This might include small business loans, grants, or investments from venture capitalists or angel investors.
Consider factors such as the terms of the funding, the amount of control or equity you are willing to give up, and the potential impact on your business’s growth.
Make sure to have a clear plan for how you will use the funds to grow your business and track your progress to measure the results of your efforts. This can help you identify areas that are working well and may need additional attention or investment.
By regularly reviewing and adjusting your business plan, you can stay focused on your goals and make informed decisions about allocating your resources.
Fund your Way to Success with BridgeUp
Funding your small business to grow further in India in 2023 requires careful planning and a thorough understanding of your financing options. By developing a metric and performance-based growth plan and exploring options such as small business loans, crowdfunding, grants, angel investors, and venture capital, you can identify the best fit for your business and take the necessary steps to achieve your growth goals.
And if the conventional funding methods don’t work for your modern business, take a bet on new-age funding models offered by platforms like BridgeUp, India’s premier recurring revenue platform.
BridgeUp is a subset of revenue-based financing known as subscription-based financing. We evaluate a company’s revenue stream and provide a score determining whether we can fund them and to what extent. The evaluation and funding process typically takes less than a week.
To know more about how we can help you, give us a holler at +91-9819660287. Or you could fill out our contact form for more information and experience the ease of subscription-based financing.
