Many people have great and exciting ideas for new businesses and almost all of us have at some point thought it would be nice to strike out on our own and become our own boss. While this is an almost-universal dream however, the number of people who actually go ahead with those plans and end up setting up their own companies is still very small. It’s a number that’s growing all the time, but it’s still relatively rare for anyone to successfully make that transition.
There are many reasons for this of course, but one of the biggest is funding. Unfortunately, most of us just don’t have the money to quit our day-jobs, let alone funding a business that will probably mean hiring staff, paying for premises and investing in equipment and marketing. If money is currently holding you back from setting up your dream business though, I’m here to tell you that it’s no excuse. While money is of course a big issue, there are also many solutions that make it possible for almost anyone to find the financing they need. There are countless options for businesses looking to find investment, and whatever your plans you’re sure to find that at least one of them is suited to you. Here we will look at some of the ways you can get funding and examine each so that you can decide if it fits your requirements.
And as soon as you start doing that, you’ve taken the first step to making your idea a reality…
A grant is essentially ‘free money’ that gets given out by government schemes, charities and other organizations. These exist in order to encourage more small businesses and have no strings attached making them absolutely ideal for anyone.
The downside of grants of course is that they’re relatively rare and extremely competitive. Still though, it can’t hurt to try can it?
The route that many people will take when setting up a new business is simply to apply for a loan. There are all kinds of different loans to choose from here, whether you opt to use a credit card loan (there are countless stories of now-famous founders starting out with $2000 on a credit card), or you decide to take out a proper business loan from a bank. Each type of loan has different pros and cons, and there are various ways you can make them cheaper or more flexible (such as taking out secured loans), but they all come with a strict set of guidelines and of course an element of risk.
If you can find an investor to buy into your business then you’ll be able to get the capital you need as well as finding a business partner who may be able to offer advice, resources and contacts. At the same time though you’ll also be giving away a percentage of your business meaning that you’ll have to run your plans by another person and meaning that you’ll no longer receive 100% of the profits. Again this varies depending on the nature of the investor as well as your individual deal, but ultimately you need to decide whether you’re happy to let someone else gain that amount of control over your baby.
Going public and selling off stocks, shares and bonds is essentially similar to going into business with lots of investors who each hold a much smaller percentage of your business. They will buy those shares thus helping to finance your business, but in exchange they will also be able to sell them off at a profit, and might be entitled to sit in on meetings and even receive a cut of your profits.
Crowdfunding means getting investment from the general public without giving away any of your business. To do this you sign up to a site such as Kickstarter or IndieGoGo and then explain your business idea via text and video, while asking for donations from the public in exchange for ‘perks’ such as products or special thanks in the credits (often this boils down to taking pre-orders). This is a relatively new way to fund a business idea and has recently launched many successful projects.
Even if the bank won’t look at you twice then, there are plenty of great options for funding your business idea, and if you really believe in it then you should find that money isn’t a good reason to give up on your plans.