Partnerships are one of the simplest forms of company. They happen when you and one or more people get together to form a business, but you’re not ready to form something more complex. Because it’s two or more people working together to start, run and grow a business, they can actually raise partnership capital money at a much faster rate.
So, how do you raise capital?
Put In Your Own Money
Let’s start with the easiest thing first, if you’re in a partnership there’s more opportunity to put more of your own money in on a collective basis. This is the easiest way to raise capital if you have it available to you.
If your business is something smaller that doesn’t have huge startup costs, starting with your own money might be the best choice. Not only are you often able to get off the ground faster but there’s much less of a risk of reducing your ownership rights for the exchange of money.
Ask Friends or Family
Asking friends, family, and other people close in your life is a big way that many small companies get a little more cash when they need it. I’m no financial or law expert, but this can be dicey not only from a legal/financial perspective but it’s also mixing business with other relationships.
That said, many businesses are very successful in asking friends or family members to contribute to their business. If you happen to be comfortable with asking and receiving money from them, then it could be a great choice. But you might want to consider getting a good contract in place.
Borrow Money From a Bank
Many businesses, especially those that are tried and true models, get access to funds through banks or other financial institutions. This can be a great choice because expectations are laid out and banks are used to lending people money.
But not everyone can get approved via the bank. Even if they are, sometimes you aren’t able to get as much money as you’d like to start with. So, it’s possible to combine this with another method.
Sell Equity in Your Company
If you’re willing to part with some of the equity in your company, then you can raise partnership capital by trading some of your equity for money via investors. That means that you need to part with something first while you get a little extra cash to work with.
If you’re considering any type of investor for your company, then you’ll most likely need to be ready to part with some of your equity. Whether you’re able to do that or not (or simply want to) is entirely up to you.
How did you raise partnership capital? Share your thoughts in the comments below.
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Tae started out as a journalist before following the money into the corporate world. But it turns out that the grass isn’t always greener and now you can find her spending most of her time writing about all the things she loves. Namely, money, travel and business with a hefty dose of self-deprecating humor. She is a podcast fanatic, blogging aficionado and loves to find new ways to turn passions into cold hard cash!
