Got a great business idea? Here are some ways you could look at to get funding.
Coming up with the money for your fantastic new business venture can be a daunting prospect. Entrepreneurs and business owners often struggle to raise the necessary cash to get their business off the ground or to fund new opportunities and strategies.
This has been even harder in recent years with recession and bank lending restrictions tightening the grip on raising finance. So, the issue of raising funding is a hot topic and here are some tips and ideas on getting your hands on that cash!
- Bank Loans Loans for start-ups and for small businesses in general are hard to come by these days. But that’s not to say that there are no funds available from banks, just that their criteria for lending is higher and you will need a solid business plan with a clear idea of when and how your business revenue will come in before a bank will consider lending you some money.You will also probably require assets that you can offer the bank as security against any loans, however if you haven’t any suitable collateral then you can ask your bank about the Enterprise Finance Guarantee (EFG) scheme, which the government introduced to help small business secure finance.
- Using Your Own Money, or Friends & Family Many people use personal savings or maybe redundancy money to start their business. Others raise funds by selling assets, such as shares or valuables, or by re-mortgaging their property to secure funds.Using your own money does have the advantage of not being beholden to anyone and of course there is often little or no interest to pay! It’s probable that however you raise money for your business, you will almost certainly need to put in some of your own money to attract other investors or a bank. Borrowing start-up funds from friends and family is a tried and tested option, but they should only invest money they can afford to lose.
Careful: If the business fails, relationships can become irreversibly damaged.
- Business Angels.. or Dragons! Dragon’s Den has proved to be an extremely popular TV show with some pretty intimidating individuals putting up potential cash if they like you or your business.A business angel however doesn’t have to be scary, and may even be an acquaintance or friend, a former employer or someone you’ve found through networking. There are no written rules for this kind of funding, an individual or a group simply offer cash in exchange for a share of the business.
They may want to pay an active part in the running of the business or maybe they will be a silent partner. It really does depend on individual circumstances and it’s up to you to decide the kind of angel investor you want to be involved with.
- Crowd Funding This is the one on everyone’s lips at the moment. It can offer a viable alternative to more traditional funding options but it is not for everyone or every business. With crowd funding it is literally that, people coming together, on various crowdfunding sites, to pool money towards a particular business venture or idea, with amounts and numbers of people varying greatly.It may be that 10 people put in say £500 each to provide a £5,000 funding, or 5,000 people each giving £1 will provide the same level of funds but spread over a larger investor bank.
- Business Grants There are many grants available for small businesses but they are quite hard to come by and can be equally as hard to secure. there literally hundreds of grants available but before you apply for any grant make sure you have a solid business plan, are prepared to put in some cash of your own and ensure that you meet the criteria of that particular grant provider.Often grants are only available for very specific business projects such as training, development, energy and the environment and innovation. If your business qualifies for a grant, they can provide the financial impetus your idea needs to either get off the ground or grow into something bigger and better.