Getting a fledgling business off the ground can be very challenging in itself, without the additional worry of having to find the capital to finance your idea. However, there are a number of ways you can turn your idea into reality by simply thinking about the different methods of start-up funding.
All businesses start out as a great idea that needs planning and expanding in order to reach fruition. Yet business acumen alone is not enough to get your idea off the ground. You will also need financial backing, so knowing where you can find business start-up funding will be key to your success.
There are a lot of ways to get the capital you need to get going, and the only limitations are your own creativity. Nevertheless, it is worth being armed with a number of options to finance your business and ensure you hit the ground running.
If you have a good credit rating you could consider a personal loan. Another possibility to contemplate is your family and friends. You may be able to borrow money from them or even offer a stake in the business as collateral. You should always ensure that any financial dealings are professionally made and that you put any agreements in writing to cover both parties.
There are several drawbacks to borrowing from friends and family. Firstly, you will be mixing your business with your personal life, which has the potential to backfire. Secondly, they may not have the right connections to help your business flourish, which is why it may be prudent to look into similar options such as angel or investor firms.
Angel investors are individuals with large amounts of excess capital that they use to invest in promising business ideas, which will in turn make them even more money. If you decide to use an angel investor, you will be giving away an equity share in your business in return for business start-up funding.
Before you decide to approach investors, you should know how much you are willing to give up, and have a good business plan in place.
A different way of generating start-up capital that is often overlooked is starting a consulting project. This allows you to create your product and perfect it while you are still generating an income. The greatest advantage to this is that you will have already tested your product by the time that your company gets going. Additionally, because you are already creating some income, there is a very low level of risk.
The only problem is that with this money already being generated, it is easy to get caught in a rut of consultancy, which has a very small profit margin and may stop you from expanding your business further.
There are also some ways you can gain access to 'free' money, such as direct grants. This is a cash award that is given out for activities such as training, employment, recruitment etc. With a direct grant, the majority of schemes usually require the company involved to put up some of the cost but they are definitely worth looking into.
The main point is that whichever way you decide to fund your business, make sure you have a good plan in place to ensure it is a success.
The key to starting a successful small business is sound forward planning and knowing where to obtain business start-up funding.