If you’re thinking of taking the plunge and starting your own business, the struggle to get funding could be a real stumbling block, especially given the ongoing economic uncertainty surrounding Brexit – lenders might be hesitant, given that we still don’t know when, or even if, the UK will leave the EU, never mind the potential impact it will have on business and the economy.
So if you’ve a winning idea and a robust business plan in place, here are some of the ways you can raise that much-needed corporate finance to kickstart your business…
5 ways to fund a startup
1. Ask at the bank
No-one enjoys a meeting with the bank manager, especially if it involves asking for money, but your bank or building society should be your first port of call when looking to drum up financial support.
If this is your first time asking for a business loan, be aware you’ll need to have a bullet-proof business plan, a squeaky clean personal credit file, and be both willing and able to stump up some of your own capital – it’s unusual for banks to offer 100% lending for a start-up.
2. Consult a broker
If you’re not confident you’ll get any joy from your bank or building society, it could be worth getting a broker to find a suitable corporate finance lender.
You’ll still need a solid business plan to have any chance of being accepted, and having your own capital will also help, but instead of being at the behest of a single lender, a broker will approach a panel of numerous lenders to find the most suitable funding solution.
3. Kickstart with a kickstarter
If you have an idea that really captures the imagination, it could be worth putting it on a crowdfunding site such as Kickstarter, or Crowdfunder as this can be a great ways to both raise capital and raise awareness.
To get started, you simply put down your business plan along with a range of funding amounts that people can choose to invest. People can choose to invest as little as £1, but you can offer incentives to encourage more sizeable donations.
And although it can take time to hit your target, the plus side is that you won’t be heavily reliant on one major investor and so your business plan won’t undergo the same level of scrutiny.
If you have personal savings or credit available on low or even no-interest credit cards, self-funding – or ‘bootstrapping’ – could be the way to go. Even if you’ve only got enough money set aside or in credit to partially fund your business, putting up your own capital might help you get a business loan as lenders can see you’re serious enough about the venture to risk your own money. You need to be aware though that, should your business fail, your savings will be gone and you might have landed yourself heavily in debt.
5. Equity or service trade
If you’re a whiz at web design, or have got a flair for copy writing, it might be worth trading your skills with another professional – for instance, you could get some legal advice in exchange for revamping a local solicitor’s website, or some SEO work on a local tradesman’s website could see you good for some work done at your new business premises. You might need to think outside the box, but this can be a great way to get work done without physically having to pay for it.
Keep your options open
Starting up your own business is a daunting task, and there will be bumps in the road along the way, especially when it comes to funding and cash flow, so it’s important to keep an open mind and consider all the options available to you.
How did you fund your fledgling business? And what obstacles did you have to overcome so you could go it alone? We’d love to hear your story in the comments section below…