If you are considering starting a business for the first time, one major concern you may have is how you are going to fund it. There are a lot of costs associated with running a business. While you may be able to start things off relatively cheaply, utilising the internet, digital and social media marketing and the goodwill of your friends and family, to take things to the next level and be taken seriously, you will need to spend.
Even if you don’t plan to take this route, and see your business as a smaller venture which will never employ staff or make it big, you will still need money to live, which is tough if you have given up work to follow your dream. Fortunately, financing a business doesn’t have to be that difficult.
You do need to spend money, but make sure you spend wisely, so you don’t need any more money than necessary and so that you don’t end up costing yourself more down the line.
One thing you can’t afford to skimp on is insurance. Research general liability rates and make sure you get your business the appropriate coverage to protect it from future expense.
Use Your Savings
If you’ve got savings, using them may be an option. But, be careful. Don’t take any unnecessary risks and make sure you keep enough back to see you through if it doesn’t work out.
Other options include re-mortgaging your house or raising money by selling possessions and assets. Just make sure it’s worth it.
Apply for a Loan
A bank loan can be a good option as long as you are careful and read the small print thoroughly. Remember, banks are a business too, and they will try to make money from you.
While banks are still reluctant to lend money, many have set funds aside for small businesses as they believe this could boost the economy.
Using a credit card to finance your business is very risky and should only be considered as a last resort or for smaller costs, not the whole. A credit card is ok for emergencies or to help boost your cash flow at the end of the month, just make sure you can always repay at least the minimum and that you get the best interest rates going.
Is your business idea something that you think could help, or entertain the masses? Does it bring something new to the market? If so, crowdfunding could be an option. If you can get people excited about your project, crowdfunding could quickly secure you the funds needed to launch, but remember, you will need another source of income from there.
Find an Investor
Another option is sourcing an investor. To attract an investor, you need to be able to sell yourself and your business model with a succinct and confident pitch. Practice this to friends to make sure you get it right; you may only get one chance.
Starting a business of your own is incredibly exciting. You just need to get over the first hurdle to get started.