So you have a great idea. You have decided on a name. You have even completed the business plan. Ideally you have written the plan with the preferred investment option in mind but we all know that starting business costs money. This is often the hurdle that prevents a lot of new ideas from leaving the first base. Well depending on your idea, here are a few choices you can take.
Self-financing – Using your money is the most popular form of financing a start-up business. Even if you do seek a business loan you do need to show that you have some savings or self investment. This is still a risky option and depends on the success of your business.
In order to pull this of, you will need to assess your assets. This could be; savings, property, vehicles and things that can be used as collateral for a loan. You will need to calculate how much you will actually need and aim to keep start up costs as low as possible. For loan options, credit cards are expensive but have been done before. You could also consider getting a mortgage or second mortgage.
If you prefer to have your own money, selling some things you do not immediately need is an option. For those already in employment, start saving up or borrow privately from family and friends. If the money is not enough, you can supplement self income with government grant or support.
Self financing is good if you are starting up small or part time while still at work. It is a great way to keep control of your business.
Business Loans – Click and search any search engine and you will be met with and array of banks and companies offering various loans. Approaching a bank is another common way to get capital for your business start-up. Generally you will also need to show the bank that you have invested some of your own money into the idea so savings is a must before applying to a bank. Bank loans can offer fast access to money with minimum repayments. Repayment plans can be flexible. Banks offer specific loans and other services to start ups and businesses.
Grants – There are Nation wide grant schemes to encourage business start ups. For Example, Prince’s Trust offers grants and loans to young people who start up a business. This functions to encourage those who otherwise would not have had any support or who have previously struggled. Organisations such as Business Link provide advice and guidance for start-up businesses and to people who would like further advice. What one needs to remember is that to apply for a Grant, the idea or business will need to be specific to the requirements. Some Grants are for a specific purpose for example, only for Arts.
Angel investors – An affluent individual who provides capital for a business start up. They will offer investment and their expertise for a 5-15% share or equity in the business. You can find Angels in Angel networks or group. An investor may be specific about what they will invest in. Venture Capitalists are also private equity finance; provide funding to start up companies at the early stage. They do however seek a larger share in the business.