Many of us dream of starting up our own business but one of the hardest things is figuring out how to fund it. Every business starts from nothing meaning it needs some kind of cash injection to get going. Where does that money come from?
#1 - Your Savings
This is probably the most common form of funding. We work other jobs, save up and then use those savings to start up our own business. We obviously believe in it so have no hesitation putting in as much money as we can.
Working another job alongside your start-up means that there will always be some extra cash if you need it until the business takes off. Running an online business is fairly cheap so you shouldn’t feel the financial implications too much.
The best part of all; you don’t owe anybody but yourself. There are no deadlines to pay back any loans which take away a lot of stress.
#2 - Business Loans
Business loans often come from banks or governments. A business loan is often needed for larger business ventures where perhaps you need to rent out a building or some kind of machinery to start production. These startups require a lot of money and business loans provide that large cash injection making the venture possible.
In order to secure a business loan, you need to provide a solid business plan along with a financial forecast. The bank needs a guarantee that you will be able to pay the loan back one way or another. That ideally will be through repayments but in the worst case, they will seize your assets. If you do opt for a loan, it’s a good idea to have a limited company so that you have limited liability.
#3 - Business Grants
One thing better than business loans are business grants for the wonderful reason of not having to pay the money back. They are harder to get ahold of but often, there will be guidance on the types of businesses the governments are offering grants for.
Again, you will need a solid business plan to prove that your business will likely be successful.
#4 - Investors/Shareholders
This is a common way to secure funding for most businesses. Investors love to make money and the bigger ones love to be a part of growth. Taking an idea and turning it into a big business.
There are different ways to go about this method of funding whether it’s selling shares to smaller investors or approaching the big guys (like on Dragon’s Den). It all depends on what kind of business you are running and what kind of funding you need.
The major downside to this is that you lose control of your business and there are a lot of legislative elements and financial reports involved.
#5 - Fundraisers
Kickstarters are becoming more and more popular. It’s a great way to raise money for your business and generate a buzz for it, which in turn should help your business’s success. This way can take time but it’s the least detrimental to you.
Online fundraising is usually the best way as you can reach people all around the world. Depending on the type of business though, you may benefit from a more physical, local approach where communities can get involved.
There are a variety of ways that you can get that initial cash injection for your start-up but take the time to fully analyse the different options and pick what is best for you and your business.
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