When you start a new business, you will need to look for ways to fund it.
It’s very rare that any new business can start with no money behind it – or you – at all, and so ensuring that you have some capital to at least get you off the ground is essential. There are a number of different ways in which you can source funding. Here are some of them – which one will suit you?
Many entrepreneurs will find that they will have to self-fund their business (known as ‘bootstrapping’) through their savings. If this is the case for you, then you will need to do a significant amount of research into developing a business plan, to identify the true cost and affordability of your plans. This could mean putting off starting your business until you have enough cash, or continuing to work at another job to have enough money to live on whilst using your savings to get your new business started. You will need to work out how long this kind of funding will last you, because no one’s savings will last forever. Working out what your costs are will give you an idea of how many months you can go on for until you either need to call it a day, get more funding from other sources, or you’re successful enough to continue as a going concern.
A loan can be an excellent way to get your business started if you don’t want to continue working elsewhere, and need to be involved in the business from day one. Many people will go immediately to their main bank as a lender, but that isn’t always the best policy. In the past this may have been the only option (other than friends and family which can be risky, and isn’t always done in a formal, legally binding kind of way) but today there are lots of different places from which to borrow money for your business. You might have poor credit, for example, which means that you should look for loans for bad credit scores. Whatever kind of loan you need, and whatever your circumstances, there will be a lender that’s right for you.
Investors can be extremely useful when it comes to funding your business. It will take a lot of hard work at the beginning, and you need to make sure that your business plan is perfect, but it could work for you. With an investment, you are exchanging part of your business for money to help it along, so if you don’t like the idea of someone else owning a percentage (large or small, it all depends on the amount invested and what the investor can do for your business) of what you’ve worked hard to set up then you may want to consider a different route. Investors can be anyone from friends and family to people who invest in businesses as a career. Depending on what you need – whether it’s just the money or you’re looking for business advice too – will give you a hint as to who to ask for help.