Being confident that your new business venture will be a success and make you the millionaire you want to be is a good start. While having this confidence is good, it is worth noting that startups commonly fail at the very first hurdle of getting funding. Starting any business requires commitment and a lot of hard work.
It also requires you to get your hands on the funding needed to turn your business dream into a reality. If you are unsure where to start looking for funding, there are some ideas that can help you get started.
Ask Your Friends And Family
The first investors for many young entrepreneurs will be their parents, extended family, and close friends. When your friends and family have a small stake in your venture, they are more likely to offer some honest and invaluable feedback on your products or business. They will also help promote your business through word of mouth.
People you know should be your first port of call for funding. If you are able to find someone you know with a secret stash of cash they are willing to invest, you might not need any other funding.
While you are working with friends and family, you still need to treat them with respect and professionalism. You are not getting free money from them. All investors have to be kept up to date on how their money is being spent and how the business is progressing.
Try Crowdfunding
Crowdfunding for your new business is a very popular option and a very effective way of raising your capital. Of course, you will need to have an interesting business idea that captures public interest.
Kickstarter, CrowdCube, and Seedrs are the most popular crowdfunding websites for startups. These websites will charge a fee between 5% and 7% of what you raise and a fee for processing the payment. However, this is only deducted if you reach your funding target.
There is a lot of potential for raising capital this way and some of the biggest startup success stories began with crowdfunding. However, you might be better off raising a smaller amount and giving a bit more equity because the risk for the potential investor is high.
If you use these websites, you need to have a solid business profile to be successful. This is what potential investors will use to judge your business and whether they should invest in you.
Approach Angel Investors
An angel investor is something who has a lot of money and is looking to invest in the next big thing. This is very much like the show Dragon’s Den without the shady comments and sneering. Many of these investors are successful business people themselves.
The best thing with angel investors is that they are more than someone giving money to help your business. They will often mentor you during your business journey and offer advice when you need it. They can also warn you about the common mistakes they have seen people make with their small businesses.
When it comes to getting the attention of angel investors, you need to be careful. A quick search should provide you with some ways of getting in touch with them. However, associations such as the UK Business Angels Association is a good place to start as well.
Keep an eye out for any conferences and pitching events that you can attend that investors are likely to go to. You should then find out how you can pitch your product. The smaller events will be just as effective as the big ones and you should never have to pay to pitch your business.
Try A Government Startup Loan Scheme
One of the fastest and most straightforward ways of getting your capital is to go through a government-backed loan scheme. The scheme is aimed at young entrepreneurs and will offer loans within a set range. The funds will have to be used to get your business venture up and running.
As this is a loan scheme, you will be expected to repay the loan. This is generally done at a rate of 6% per year over a maximum term of 5 years. As business loans go, this is a very good deal and one you are unlikely to get elsewhere. You can also get free guidance and support in writing your business plan for these schemes. If your application is successful, you also get a mentor for 12 months.
Look At University Schemes And Competitions
If you are a student, your university could be interested in investing in your business. Many of them also have cash set aside to help young entrepreneurs like you. Universities love nothing more than nurturing the entrepreneurial spirit of their students. Additionally, if the business is a success that will be good PR for the university.
You should try looking online for any young business competitions and funds linked to your university. Contacting the careers department of the university is also recommended as they can point you in the right direction.
Fund It Yourself
This is an option that is easier said than done. However, if you are serious about your business, you can try putting some cash aside to help you fund it. Setting up a savings account that is only used for business funding is a good idea. Any spare cash you have should be deposited into this account and it will grow over time with interest.
One of the best savings accounts with the best interest rates at the moment is actually offered by an online banking startup.
Ask For A Bank Loan
This should be your last resort because it is generally harder to get accepted for a bank loan as a young person or a new entrepreneur. In these situations, the other funding options may be a better option and more realistic. Qik car title loans are an alternative option.
To get a bank loan, you will need to have a good credit rating and a very solid business plan. This will tell the banks that you will be able to pay back the loan when the time comes. Of course, if you are working on a killer business plan and perfecting your credit score, a bank loan might still be within reach.
