Start ups don’t grow on trees. If you’re looking to launch a successful company then you’re probably going to be responsible for most of the growth yourself. But there is certainly more than one way you can raise the cash to get your business off the ground. Whether you already have a wealthy financier ready to inject cash into your project or need to secure money from more personal links, there are plenty of opportunities for funding.
In an ideal world, this is always the simplest solution. If you have savings stored up that can help you through the first year of business, then you should begin seeing a return in your investment shortly after. Investing your own money means you won’t have to factor in the interest on loan repayments and means you have a clear idea of exactly how much you have to play with.
Of course, if your business underperforms, then you risk losing a substantial chunk of your personal finances, so this method is certainly not without risk. The best course of action is to set up a separate savings account for business funds, in order to keep track of your spending.
Small Business Loan
If you’re looking for an immediate source of investment, then a small business loan could be the way to go. Most banks will offer small loans to cover the first few months of business, as long as you have a solid financial plan to backup your intentions. A loan like this can help you purchase stock, create an opening product line or secure business premises.
The main advantage of this type of funding is that you don’t have to stump up the money yourself or even have a personal connection to the investor. But there’s no point taking out a loan you won’t be able to pay back either. Make sure you understand all terms and conditions associated with the loan, as well as any interest you’ll accrue.
Grant Or Sponsorship
Should you be unable to agree a deal with the bank, then you might be able to secure financial backing from an independent lender. Often local governments offer bursaries to small businesses looking to establish themselves in the area, as long as they pass certain expectations. A sponsor could also be another option you wish to pursue, especially if the sponsorship comes from a recognised brand in your niche.
Crowdfunding has also become increasingly popular in recent years. If you have a particularly innovative product then you may be able to convince members of the public to invest. Cutting them in on any future profits can be a great incentive.
Advances On Invoices
If it’s a short term fix you’re looking for, then a service that offers invoices advances might be the perfect solution. In this scenario, a money lender will front you the money you’re expecting to receive from invoiced clients. Once the client pays up, you can then repay the lender. In this way, you can close the gap between carrying out a job and receiving payment for it. Improving your finances like this can help with cash flow problems and allows you to move onto new projects quicker.
Chris Weston is the director of Milton Keynes based accountancy firm, Aston Black. Chris has over 25 years experience in accounting and taxation, working with his small team of staff to provide quality advice for small businesses up and down the country.