Finding a way to fund your latest business venture is a major obstacle you’ll have to overcome on the road to building a robust business.
There are a few ways to go about this, and plenty of considerations to keep in mind as you set out to secure the capital you require.
To that end, here are the steps you’ll have to take to go from having a concept for a company to actually securing the funding that can make it a reality.
Start With A Plan
Simply put, you need a business plan to outline the framework for your fledgling firm. This will not only give you an idea of how much you’ll need to spend to fulfill it, but it will also act as the calling card that you can use to coax prospective investors to part with their cash in support of it.
There are a few ways to format a business plan, but the general purpose will remain the same. And even the most in-depth examples don’t take too long to put together, so long as you do your research, so there’s no excuse to overlook this.
Look For Ways To Cut Costs, E.g. Buying Used Equipment
With your plan in place, it’s time to start assessing what potential costs you’ll face, and whether it’s possible to reduce the amount of funding you need by making efficiency savings upfront.
One of the ways to do this is to opt for more affordable equipment which is second hand rather than brand new. This applies whether you need office equipment like computers and printers, or manufacturing equipment like an inventory of used metal shear machines.
Whatever the case, the sooner you shave off the pennies, the easier it will be to justify the rest of the unavoidable costs of creating a company from scratch.
Consider Your Own Assets
A lot of entrepreneurs fund their startups with their own money, and there is one very good reason for doing this; retaining ownership and control over the business, rather than relinquishing it to outside investors.
Obviously this is not always an option, and it is more of a risk to sink your life savings into a project than it is to play with capital that comes from someone else.
But even so, if you have a plan that you think is solid and a workable budget, as well as adequate assets to commit to it, then it’s a potential funding prospect which might align with your ambitions and ethos.
Look For Loans
Another option for startups is a standard business loan. This acts like any other kind of lending, in that you’ll have to make repayments on the total over time.
However, you don’t need to relinquish ownership of any portion of the startup, and can also reduce your exposure to the risk of insolvency by attaching the loan to the business rather than to yourself as an individual.
Of course you’ll need to convince any lender that your business has a chance of sustaining itself over the course of the repayment period, and also of justifying the size of the loan you are asking for, which is not easy unless you’ve done your homework, as discussed earlier.
Explore Alternative Lending
Tried and tested business loans are not your only avenue to go down, and if you cannot get approval for this type of finance product for whatever reason, there are alternatives out there.
For example, you could consider packages which let you upfront your revenue, essentially lending against the anticipated earnings that you’ll achieve further down the line.
There are also products such as just in time financing which could be worth exploring. Costs may be steeper than traditional loans, but if you do not have another way to access the capital your startup needs to grow, this should definitely be a consideration.
All sorts of private individuals and investment groups are out there with the capital on hand to help startups get off the ground.
The trick is to find investors that are on the same page as you, are willing to supply support as well as money, and aren’t offering unreasonable terms. This can be a bit of a minefield, so it is crucial that you don’t jump at the first offer for investment you receive.
Also remember that you can use a combination of funding pools to get started in the business world and build your brand, and not put all of your eggs in one basket.