If you are setting up a new business, then you will have many things to sort out. From finding premises to hiring the staff you need and planning your marketing push; your to-do-list will no doubt be lengthy. Of course, this is all part of starting a new venture and something that you should find exciting. With it being your business, you get to make the choices and to plan how it will all work.
With most start-ups a funding source is needed. There is no doubt that setting up a new organisation can involve huge costs when you factor in buying machinery and stock on top of all the other expenses you will have to meet. The big numbers involved very often means that self-funding is out of the equation. Even if you do have the money needed in your bank account, you may be unwilling to risk it all.
So, what is the solution to this predicament? For lots of business owners, it is finding a source of external funding to help them get started.
Sources of funding for new businesses
The good news for any entrepreneur needing help with funding a business is that there are many ways to source the money needed.
- Peer to peer lending – one of the best options for many entrepreneurs is using an online peer to peer lending platform. This is basically the same as getting a loan from your bank but much, much easier. You sign-up with a P2P platform and ask for the amount of money you need to borrow to get started. Investors using the P2P platform then review your business and lend the money if they feel it to be a worthwhile investment.
As with a normal loan, you would pay back the whole amount borrowed plus interest over the agreed period of the loan. A big name in this sector is Lendy that has recently taken steps to offer more to their users who invest money and those looking for funding. Using a well-known platform like Lendy is a wise move because you know it is safe, secure and reliable.
- Angel investor – another source some businesspeople turn to for the funding required is an angel investor. These are like normal investors in that they give you money for a stake in your new company. Where angel investors are especially helpful is that they also offer you advice and guidance on succeeding in business. There are various websites on the internet where you can find this type of investor, the Angel Investment Network being one.
- Friends or family – if it is a relatively small amount that you need to borrow, why not consider turning to your friends or family? Although this is something that many do not consider, it is actually one of the best financial tips for new business funding. It not only allows you to access the money you need but does so on a more informal basis and with more flexibility in terms of repayments. It also means you get to work with people you know, rather than strangers.
- Consider a grant from the government – many countries around the world offer grants or schemes from the central government to help businesses get started. The UK is a great example of this and has many different schemes that could be a viable option for you. The best bet is to check out the grants to apply for at sites like Business Finance Support Finder. Very often it is quite easy to access this funding and it can help your business to open and start trading.
- Venture capital firms – if you need a large amount of funding then very often these multi-million-pound firms are the organisations to go to. They are large organisations that invest in select companies for their clients and can be very handy for new businesses in sectors like tech or IT. You will need a watertight business plan to convince them, but they can often provide the higher levels of funding that individual angel investors or normal investors cannot.
Find the funding you need to succeed
If you are just starting out on your new business venture but need some funding first, the above ideas should help. All give viable ways to access the money you need to set-up and operate. Some like angel investors or venture capital firms will even hold your hand during the early stages to help you succeed.