LONDON – If you’ve decided to take the leap and launch your own business, then one of the biggest questions you’ve probably got right now is how to finance it? There’s lots of information out there for entrepreneurs looking to get their startup off the ground and a whole host of different financing options, all with a variety of different risks attached.
That leaves a potential minefield of financing possibilities for you to try and navigate. Strip them all back to their most basic levels though and you have two choices – you can either beg or borrow to get the funds required to turn your small business dream into a reality.
The question then is which option is best for you? Take a look at our handy guide to help you decide.
Borrowing is probably the number one means of financing a new startup, largely because of how many different ways there are to go about it. Banks are a good first port of call, especially if you have a well written business plan that shows the potential of your startup. Convince a bank that your chances of success are high, and they may be inclined to offer you a business loan to get the project off the ground.
The government may also be able to help. Did you know that there are over 100 different government grants that startups and small businesses are eligible for? These cater for a whole host of different fields and industries but given the sheer number, chances are you’ll find one for your business. The conditions surrounding them can often be strict, but that’s more than made up for by the fact that these are grants rather than loans and as such, you may not need to pay them back.
Finally, you can always seek to borrow on a personal level to finance your startup. Lots of lenders now offer loans no credit check so even if you’ve got a bad credit score, you can still borrow money.
Begging is a word that often comes with negative connotations, but when trying to get a startup off the ground it can be an effective way of going about it. Ask yourself who are the most supportive people in your life and the answer you’ll probably get is your friends and family.
That supportiveness can transfer itself to them helping to fund your business. If you believe firmly in a project, then chances are that enthusiasm will rub off on your friends and family and they may be willing to either invest in you or loan you the money needed to get the ball rolling.
The major downside to securing funding from friends and familyis that if it all goes wrong, you could end up letting down those closest to you. That’s why it is important to explain the risks involved before you bring anybody on board, allowing them to make a considered decision.
Alternatively, you could ask an angel investor to come onboard. These are successful entrepreneurs who are looking to fund the next big thing and by securing their support, you’ll not only be gaining financial backing but also their business acumen and experience as well.