Without the right funding, any new business is doomed to fail
What options are open to you as a new business owner looking to find ways to fund your startup? Author Jessica Foreman looks into five tried and tested sources of finance.
Lots of people dream about starting their own business. Maybe theyve got a burning idea that they are sure will make them a fortune.
Maybe they are frustrated in their job and know deep down that they could do it better? themselves if they were in charge. Or, perhaps theyve been made redundant, and want to use this as motivation to bounce back stronger than ever.
Regardless of the rationale, setting up a business is a popular ambition. Indeed, at one point in 2016, 80 new firms were being set up every hour in the UK.
Whatever the business and whatever the motivation, there’s one thing that unites them all they need money to get off the ground.
Without the right funding, any new business is doomed to fall by the wayside. So, what options are open to you as a new business owner looking to find ways to fund your startup?
Using savings
If you’ve got the funds available, then it might make sense to use these to kick-start your new business. That way, you’re not relying on paying back anyone else, and can keep a sense of control over your finances.
Since starting a business requires careful planning, it’s likely that you’re going to build up to the big moment. As you do so, it’s important to try to maximise the funding pot you have available.
With interest rates low, this might mean locking your money away for a while or, if you know what you’re doing, trading online to get better returns. Carefully managing your money can make your savings grow to a level that will allow you to fund your new startup.
Apply for a grant
National grants: A guide to what’s out there?
it’s in everyone’s interests for up and coming businesses to become a success. They employ people and pay money back into the economy through taxes, after all. As a result, there are a host of grants available to give people a leg-up when they start out in business and can be great when searching for ways to fund your startup.
Grants can cover everything from purchasing equipment to saving money on premises and rates. There’s a long list of available options, just search the government’s business finance support page to see if there’s something that’s relevant for you.
Get a loan
Failing that, you can apply for a loan from a bank or building society. Before you approach your bank you will need to have done your homework to prove to them that they should lend you the cash you need.
Youll need to have a business plan that spells out a vision for your startup, have conducted thorough research and be able to demonstrate there is a gap in the market for your business to fill.
Youll also need to be able to calculate cash flow projects which show how youll be able to pay back your loan, and youll have to prepare a pitch in which you can speak with passion and in detail about the above. Also, have all of your key financial paperwork to hand to show that you will be a responsible borrower.
Crowdfunding
You might decide that youd rather turn to real people than the banks for your funding. Crowdfunding is increasingly popular among startups, who reach out to people to provide the cash they need, often as a series of small investments.
You can offer something in return for their investment perhaps first chance to sample or purchase your product or a unique experience and this does give you the chance to create a buzz about your business before it launches.
Angel investment
You could also try to win yourself your very own angel investor. This is a bit like Dragon’s Den albeit without the tense music? and sees you trying to win over the support of an individual investor, who is often a serial entrepreneur who has helped many businesses to get off the ground. Portals such as the Angel Investment Network can help to you put you in touch with the right individual.
Jessica Foreman is an author and freelance writer.Six smart ways small businesses can save money
