As a freelancer, you work hard to secure new clients and grow your business to a sustainable level. However, expansion is a whole challenge - one which involves investing money you may not have access to.
A common choice for many is to either use your savings, or take money out of the business to reinvest. While both of these options can work, there are other alternatives available that will enable you to raise funds without impacting on your personal or professional life. Here we explore a few.
1. Look into crowdfunding
One of the best ways to inject new capital into your business is through crowdfunding. If you already have an established audience, this provides the ideal platform for you to tap into them and receive small contributions that can help finance new services, projects and products.
To give you an idea of just how popular crowdfunding has become, in 2016 one of the most popular platforms, Kickstarter, raised a total of $530 million. 41.4% of this was for businesses and entrepreneurs, which equates to more than $219 million.
Remember, these figures are for a single platform three years ago, and the idea has continued to gain momentum. It is now estimated that a total of $300 billion will be raised by the crowdfunding industry by 2025.
Once you choose a platform you feel comfortable with, you can set up a page to detail how much you want to raise and to explain what it is being used for. You can offer incentives ranging from rewards to shares in the business, if you wish, or anything else you see fit.
From there you can set a deadline, track how much has been raised, and provide updates to supporters on how their contributions are helping your business to grow.
Some of the most popular crowdfunding sites include:
2. Consider a short-term loan
Short-term loans offer another avenue to boost your freelance business. While it isn't quite as creative as crowdfunding, one of the biggest advantages is you will receive the money much faster.
Taking out a short-term loan from a reputable company will allow you to raise capital, improve cash flow and cover the range of expenses that come with expanding a business.
When searching for the best deal, look for lenders offering a low annual percentage rate (APR) - and be aware that if you're likely to take a while to repay (a longer loan term), the interest will mount up over time.
The biggest advantage that comes with taking out a short-term loan is that you will only have to make repayments for a fixed amount of time. This offers protection for your business finances, as you will not be committed in the long term.
Applying for a short-term loan is generally straightforward and hassle-free. Compared to a long-term loan, it also requires you to submit less information. A decision is usually reached very quickly, and funds released into your bank account in a matter of days.
3. Incentivise customers to spend more
When you purchased the domain and website for your business, you were probably tempted to take up the option to pay for a year upfront, in return for a large overall discount, rather than paying month to month. This same method offers another way to quickly raise money for your business - and it doesn't take long to set up or implement.
Whether you offer a service or product, incentivising your customers to make a bigger, more expensive upfront commitment in return for a discount creates a win/win situation. Not only are you securing a larger order, but the client gets the product/service they wanted for a lower rate.
You can be as creative with this approach as you need. Whether it's offering a premium feature or product at a cheaper price, or offering enhanced service in return for a longer commitment by the customer, this can quickly raise a large amount of money that can be used to help your business grow.
4. Identify your most profitable customers
Using the Pareto Principle - sometimes known as the 80/20 rule - can have a hugely positive effect on your business. It works on the basis that 20% of your customers represent 80% of your sales. This means by placing more emphasis on your most important customers, you can potentially garner more sales to grow the business.
A smart way to do this is by offering additional services or products, or an enhanced level of service, to your key customers that aren't available to others. Of course, the scope of what you can do will depend on your business offering - but once you have built a strong relationship with your most profitable customers, it will be easier to maximise their spend with you.
The 80/20 rule has been used successfully by business owners for years. It's a rule that can be applied both within and outside of your professional life. By using the principle, you can maximise the opportunities that come from important customers, to help take your freelance business to the next level.
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