How to Finance Your New Business: Useful Funding Advice for Startups

by Startacus Admin
If you have an idea that you would like to turn into a business venture, it’s likely that you will need to acquire funding to get things up and running. There are many start-up costs that most businesses will face, such as stock, hiring employees, and securing premises.
While some entrepreneurs may have savings that they can use to get their idea off the ground, others may need to look further to obtain funds before launching. Getting start-up finance can be challenging, so to increase the chances of success, here are some of the financing options you can look into.
Create a Detailed Business Plan
Before you go about obtaining funding for your startup, it’s vital that you have a detailed business plan in place. Whether you’re a first-time entrepreneur, or you have experience in running a business, it’s important that you get your affairs in order first. Your business plan should outline your financial objectives and goals and sales forecast so you can monitor your financial position. Having a good understanding of your day-to-day costs will help you create a realistic budget for your startup. When attracting investors, they will need to examine your business plan, so make sure that you don’t leave any important details out.
Crowdfunding
Instead of relying on traditional avenues like a bank to raise funds for your startup, one of the common ways to raise finance is by using platforms like Crowdfunding. To use Crowdfunding effectively, you will need to ask a large number of people to invest a small amount of money into your business. There are several types of crowdfunding, such as equity, donation, and debt.
Equity crowdfunding is when individuals invest in your startup in exchange for a stake or shares in your company. Donation crowdfunding is when individuals donate cash to your venture because they believe in what you are doing and expect nothing in return, whereas debt crowdfunding is when people lend you cash and expect to receive their money back with interest on top. More and more entrepreneurs are seeing the benefits of crowdfunding and how it can help you raise the funds needed to successfully operate their company.
Angel Investment
Angel investment is when an investor using their personal disposable finance to offer equity finance to a startup. The investor will likely want to take shares in your company and possibly an active interest in your startup, in order to receive a strong return on their investment. Having an angel investor by your side to provide support and guidance can be a big help, especially if you are about to launch your first startup. Thanks to their experience and knowledge, angel investors are used by thousands of startups across the country.
Take Out a Loan
For many companies starting out, taking out a bank loan is one of the common ways to obtain finance for their business. If you have a poor credit history and are unable to take out a bank loan, there are loans for bad credit that you may be interested in. There are stll websites that you can visit who help find loans for people with bad credit. For example, New Horizons works with a large pool of direct lenders that have vast experience in providing poor credit loans.
Speak to Friends and Family
Many startup entrepreneurs turn to their family and friends to help fund their new business. Before entering any kind of business agreement, it’s crucial that you note everything down and if necessary, seek legal advice. A simple contract between parties will minimise the risk of any complications during the process of getting your idea off the ground. If you have a close relationship with someone in your close circle who is willing to help, make sure that you do not take them for granted. You should treat them the same as you would with a business lender by handing over a financial forecast and robust business plan that outlines your goals for the next 12 months.
Business Grants
There are hundreds of government grants that are given to small businesses and startups every year. Covering a variety of awards such as saving money on rates and premises through to buying cheap IT equipment, government grants come in all shapes and sizes, so if you would like to apply for a business grant, it’s best to begin with the Business Finance Support Finder.
For your startup to thrive and be the success you envisaged, it’s critical that you secure funding for your venture. If you don’t want to take out a bank loan and would prefer an alternate route, there are lots of different options available to help obtain finance for your startup.
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Published on: 16th June 2020
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