You’ve done your research, and are sure that you have an idea for a product or service that people will love. You’ve put the work in, and are sure that once it’s up and running your business will do well. There’s only one snag- the upfront costs. You really do have to spend money to make money, and the cost to set up can be incredibly expensive. You may need to hire office premises, buy equipment, you need the right insurances, licenses, you might need to buy stock. None of these things come cheaply. Here are some of the ways you can fund these initial costs and get set up, so you can start making money yourself.
If you have a good credit score, you could consider taking out a line of credit from a bank or lender. Many have options for whether your business is expanding or just getting off the ground, and some even have options for you to ‘tailor your own’ bank loan, so you get exactly the right one for you. The downside to taking out a loan (as opposed to the other options) is that you have to not only repay but also pay back interest too. If your business doesn’t start making money as quickly as you’d like, it could mean you start getting into the red. But if you want a fuss-free way to raise the cash, this is an ideal option.
Crowdfunding allows people online to each contribute a small amount of money. This all adds up and can help you to raise the finance you need. This method works best if you have a really unique idea which people want- a new and innovative product or service will grab people’s attention and make them far more likely to invest. Some business ideas might be fantastic, but not interesting enough to grab the attention of people willing to contribute.
Wealthy investors looking for companies to invest in may choose to put money into your company in return for shares. This is good as you get money upfront and also the investor may act as a mentor as they’re likely to have invested in lots of businesses already. If you’re new to the game, this kind of advice can be invaluable. On the downside, you don’t own all of your business and so take a cut to the profits you make in the future.
If your business idea has been in the pipeline for a while, it gives you chance to save yourself. Alternatively, you might already have savings, either way, paying for things yourself is possibly the best option. You don’t have to give anyone shares in your company, you don’t have to pay back loans and interest. And when it’s your own money you’re working with, you may well be that extra bit more careful with it too!
Which do you think is the best way to fund a startup venture?