Funding your business: businessmen sat at a desk with ipad

Worried about how to finance your business? There are plenty of ways you can invest until you start to make a profit.

Starting a new business is an exciting thing to do, isn’t it? It’s full of stress, tension and sheer wonder at whether you are about to make the right decision at all about the future that you are laying down for yourself.

Let’s be honest, all that effort you have put into your business plan and your dreams about how you’re going to be one of the big fish in the big pond is going to pay off, because you’re going to make it happen.

But here’s the thing. To be able to make it happen, you need money. Cash money. You need backing and you need people who believe in you to back you up every step of the way, otherwise your business may not be as successful as you’d like it to be.

There is no magic money tree (unfortunately). There’s no set of magic beans to grow a beanstalk to golden eggs. There isn’t an angel, waiting to sprinkle you with money dust.

All there is is you and your ability to research the right things so that you can fund your exciting business idea.

 

Funding doesn’t just come from the bank, either.

There are a lot of options for funding your business out there in the world, and if you don’t do the right research, you won’t be able to find out exactly what those options are. You don’t have to rely on just one or two options when there are more creative options for you to take your pick from.

Of course, each financial solution to your startup funding woes has a disadvantage, but when you’re sorting out funding your business, understanding all the options is the only way to make the right decision.

There are even some funding options that may not be available for you, for example, a private investor may value your experience more than your idea, while a loan company advertising guarantor loans online are going to value the creditworthiness of the person who is willing to back you.

It then becomes a question of what you qualify for, and whether you have the option to go ahead and apply. You need to channel your efforts in the right way and checking out these eight financial options for funding your business can be your starting point.

 

Crowdfunding

Investors are constantly looking for viable ideas to pour their money into. They search for these ideas on crowdfunding sites like these.

Starting a campaign to fund a business can look a little tacky to regular people, but to a group of investors? It’s bold. It is a way to show off what you are able to do and advertise your services all at the same time.

It’s a way to get your name on the map and get noticed, and that’s exactly what you need to happen.

In order to get funding your business, you should set monetary goals and time goals, both of which have to have a real end. There’s never going to be a bottomless money pit ready to keep your business financed, but there are ways that you can keep your business looking healthy simply by hooking in the right investment.

Always include a link to your business plan in your campaign so that your potential investors can view.

 

Bank Loans

For some time, banks were putting the chains on the vault when it came to small business loans. There was too much money going into loaning people what they needed for their business and not enough being repaid in successful ventures. It’s because of this that people are finding it harder to get a loan from their usual banking facility.

As a new startup, you need to have an impressive credit history. It can also help to have assets already that you can put up against the loan.

Be sure that you’re willing to risk such assets, though, as the last thing you need is to lose your home over your business going bust. Make smart choices here, and seek the advice of an independent financial adviser.

 

Bootstrapping

While this sounds like a country dance, you’ll be tip-tapping along tightening your belt as much as possible for funding your business if you decide to go down the bootstrapping route.

The thing with bootstrapping is that you won’t be using your continued earnings to self-fund your company, but actual savings that you had to one side along with cash that is readily available. You need to look at the scalability of your business here, and only use the cash that you can afford to use.

Doing things this way means that you can control the pace of the growth of your business so that it fits comfortably for your budget.

This is exactly what I did to fund this business. I used my savings to get the website up, get business cards printed, and buy training. Because I don’t sell any products, I didn’t need to find manufacturers and pay to re-sell their products. I only need my computer to proofread, which is why I was able to set it up for a cheap-ish amount.

 

Trade Equity

It’s not often you find it anymore, but you can fund your business with your skills. Obviously, you won’t be able to approach your bank manager and offer to write his company blog in exchange for thousands in business support.

However, you can offer people something with your skills. If you are busy building servers as your business, you can negotiate for your office space to be rent-free by offering to support the IT in the building for other people. It’s an old way of doing things; swapping skills for goods and services, but it’s a way that hasn’t quite died out yet.

 

Bank Of Mum & Dad

One of the most popular ways to get the funding for your startup is to ask your parents.

Most of the time, parents own a home and they may be willing to take out an extension of their mortgage. They might want to agree the terms that you will repay them when you have earned profit in your business.

Technically, this could make them partners in your company, which means that you could offer them a percentage amount instead of the money repaid to them.

Don’t forget, though, that this comes with a personal cost. Money has the uncanny ability to get in the way of your relationship, and if you don’t want that to happen it’s best to not risk asking friends and family for funding your business.

 

Credit Cards

Rather than fund your entire business, credit cards can keep a healthy working capital going through your company. They can be used when making smaller payments. These might include a bill that needs to be settled immediately, or expenses and petty cash.

Don’t forget though, credit cards need to be settled early to avoid interest and late payment penalties. Falling behind on the payments can really affect your credit rating as a business. You’ll need to have a plan for quick repayment where possible.

 

Social Lending

This is quite the alternative finance option for businesses, where people pool their cash and you can borrow that money from them.

Sites like this are a prime example of social lending, and it can be what you need for your business. It’s not the norm for companies but it’s an option when other avenues may reject applications.

 

Angel Investors

Okay, so earlier we said there were no angels with money dust hanging around, but there kind of is!

Angel investors are high-net-worth individuals who are interested in backing a company. They put the name of the company out there, without much interest in being involved in the business itself.

The terms are usually better than others out there. They can provide fantastic advice as they are usually former business owners themselves.

The thing with angel investors is that they need to have a plan from you, a comprehensive plan to pay back the money that they put up funding your business, and a way to earn all the profit that you want to earn.

 

Conclusion

A business needs to be able to expand properly, and funding is the way for this to happen properly. A business without the right funding is going to drown very quickly in the industry that it’s in.

With most funding options, you get great advice and support from others. As there are so many business funding choices out there, you could choose more than one to fund your business.

It’s not just the marketing and IT that you need to fund, either. You need to be able to pay staff, ensure suppliers are kept in the loop and clear regarding payments.

You don’t want to be the sort of company that misses payments. Not only does that ruin your reputation, it ensures that you aren’t the receiver of a loan later on. You’ve got materials, an office and people to pay including yourself, so make smart financial decisions when it comes to your business and you won’t regret it!

 

8 Ways of Funding your Business

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