5 ways to finance your startup
Great ideas are ten a penny but transforming them into a viable business is another prospect entirely. The 2014 figures from Companies House revealed that over half of new startups fail within five years, with a lack of bank lending cited as one of the most common reasons. However, if you want to create a successful startup here are five ideas that might help you pursue your dream.
1. Bypassing the bank
It’s difficult and time consuming to borrow money from banks. If you have a car that’s less than ten years old and in good condition, then CarCashPoint Logbook Loans are a useful option. Once your loan application has been agreed, you’ll receive the money in your account within an hour.
An added bonus of this type of scheme is that even though the car belongs to the company for the period of the loan you’ll still be able to drive it and regain full ownership once the loan has been paid off.
2. Ask the government for funding
With 73,233 startups established in the UK since January 2016, according to Start Up Britain, the national zeal for entrepreneurship doesn’t show any signs of diminishing. Whether you’re on Job Seekers Allowance (JSA) or in a job and thinking of setting up your own business, funding does exist. The government’s Enterprise Allowance is a good place to start for JSA claimants. Alternatively, take a look at the government’s own Business Finance Support website for some regional and national funding schemes.
3. Angel investment
Angels don’t just float around the heavens. Business angel investment is one way in which startups can access finance for their projects here on earth, the financers are usually affluent individuals who provide you with the money required to start up but will expect a cut of profits or sizeable shares in the company. If you are able to source a loan from an angel investor you’ll also be able to benefit from a wealth of expertise from your angels.
It’s essential that you have a dynamic and viable business plan and you must be prepared to be interrogated on every aspect of your startup. The angels are hard nosed professionals who may want to invest their money in your project, so you’ll have to show them how they will make a return on their investment.
Some of the most successful startups have managed to source finance from crowdfunding platforms, though it is essential that you carry out some thorough research before going down this path. Some of the lenders may be individuals who like the sound of your project and have some spare capital to invest; others could be a large equity house.
Importantly are you going to be offering investors shares, or might you be able to offer an alternative return for your investors? If you’re an events company, for example, your investors may be happy with free tickets to an up-market celebration. The selection of crowdfunding sources is diverse; it’s up to you to find the one that will suit your start up best.
5. Friends and family
If you’re not looking for a huge sum of money, why not approach your friends and family with your business plan? These are the people who know you the best, so they’ll have some idea whether you are being realistic about your startup. Once they’ve agreed, write a contact with all the repayment conditions and then your brand new startup will finally be able to get off the ground.