One of the most challenging aspects of running any new business is ensuring you have the funds to turn your small seed of an idea into a fully-fledged corporation. While many entrepreneurs have the ambition to make a success of their business plan, the reality is that cash flow can be a major issue regarding getting started. Unless you’re wealthy, have saved hard or have been left a great deal of inheritance, it’s almost impossible to get your business up and running without the relevant funding. Here are some of the best ways to fund your new business:
Businesses that are charity-based or are in the interests of the general public may turn to Crowdfunding as an option to raise the funds needed to get the business off the ground. People may decide to become shareholders or lend you money; dependent on what is required. This option is better suited to businesses with significant growth potential. The more people your marketing campaign reaches, the more money you’re likely to raise; but do be aware that it can take time to reach your target.
Family and friends
If you’d prefer not to ask for external help, one option to carefully consider would be asking friends and family to financially support your business in the very early stages. This option would be suitable for entrepreneurs who gave failed to convince other funding options that their business venture is viable and are now in need of immediate financial help. While this may seem like a logical option, don’t underestimate the risk of disagreement and friction when mixing business with relationships. Analyse the pros and cons of asking family and friends to become lenders before jumping into this and agreeing to anything.
On the rare occasion, some businesses may be offered grants to fund their start-up and while they are often hard to come by, they do exist and there are often terms and conditions in place to be eligible, as follows:
- Meeting demands
- Solving an issue
- Advanced technology
Some grants are known as Research and Development grants (R&D) which are awarded by the government to companies with innovative designs. The good news is that this cash bonus doesn’t have to be paid back. These grants may need to be declared when submitting your return at the end of the tax year, so it would be wise to get your finances in order.
Investors may be interested in your business idea and wish to invest in exchange for shares or interest on the money that has been loaned to you. However, do be aware that only limited companies can sell shares as opposed to sole traders and partnerships. To gain the attention of an investor, you’ll need to have a strong business plan which details your business idea and proves there is potential for future growth. It would be in your interest to analyse trends on the stock market to provide some guidance on how your business needs to be performing to secure investors and potentially be accepted onto the stock market.