When starting up a new business, it’s likely that you’ll be a messy mixture of excited, nervous and probably a little scared and we can hardly blame you. With all of the startup concerns to think about, financing these new business ventures can leave entrepreneurs pulling out their hair with concerns around how they’re going to build up the capital to get their business off the ground. While the likes of short term loans can help in personal financial emergencies, businesses don’t quite have that luxury, but thankfully, there are a few ways that you can secure the funds you need – here are five to get you started.
- Get A Bank Loan
This point is usually a good place to start providing you have an understandable and believable business idea. Banks are willing to lend, but only to those, they believe they’re going to get their money back from. If your business idea is completely out-there and seems crazy to your average banker, then it’s likely that a bank loan might not be your best bet. However, if you can put your venture down on paper in a way that makes sense with a full business plan and budget well and truly mapped out, you could be in luck. Besides, the worst that could happen is that you receive a rejection, at which point you can move onto one of the following four points!
If you are developing a product and have a pretty substantial following already, why not try crowdfunding? You don’t have to have masses of potential customers ready to buy at the drop of a hat, but with a good group of people willing to spread the word and a product that people want to buy and they believe in, you’ll find that a lot of the public will be willing to put their money into the venture before it even becomes a physical product. A good pitch on a crowdfunding site and a product or service worth developing is all you need – what’s the worst that could happen?
- Angel Investors
Angel investors aren’t too unlike the company but rather than collateral, they often ask for a stake in your company. Think Dragon’s Den – you pitch the idea to the best of your ability or better, and hope that you attract the attention of an angel investor willing to put their money into getting your startup off of the ground and into the public eye. Of course, the financial help is one thing, but angel investors typically have a wealth of knowledge and are willing to pass on this knowledge to you. They’ve made an investment and they want to see a return and with the possibility of countless successful startups under their wing, it’s likely they’ll have the knowledge you need to get that edge.
Microloans are a little like short-term loans but from non-profit organisations. Their interest rates do tend to be higher than most typical banks or lenders, but these smaller loans (usually around £/$500-£/$35,000) are ideally designed as a way to bridge a gap or help push a certain project within an already established company. If your facing a financial gap and need a boost to get through it or have a contract or project they need a bit of extra cash to push.
- Raising Money
If all of the above seem to fail, it may be time to turn to friends and family to raise the money. This isn’t a very widely suggested point, mostly due to the fact that your family or friends might either lack the sufficient funds, or you could be risking good relationships if you can’t pay back the sufficient funds. You could opt for other fundraising events from the public as opposed to your friends or family in a similar way to crowdfunding, though you’ll likely need a good project to promote in order to gain the attention.
Raising money for your new business ventures can seem like a struggle, but thankfully there are a few ways in which you can start to pull in the funds you need. Hopefully, this guide has given you a good place to start – good luck!
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