At some point, many of us will have had what we think is a brilliant idea for a business. Often they do not get off the ground because of a lack of funds or serious planning.
However, there are several ways to finance the start-up of a business, some more costly than others.
Bank Loans Are Not So Easy
To some people, the most obvious way to borrow money is from a bank. Lending criteria have got much stricter in recent years, and now this is not always the easiest way to raise money. The bank will expect you to produce cash flow forecasts, projected accounts, and to jump through hoops before they will consider giving you a loan. Sometimes it is possible to get a percentage of your loan guaranteed by the government, and then the banks are much happier handing over the cash you need.
Factoring Is a Possibility
Factoring is an expensive way to finance a business, but in the current climate, more companies are choosing this method. The factoring companies pay for the services or products provided after taking a percentage as their fee. They then collect the debt from your customers. They usually charge somewhere in the region of 2 percent a month, which does not sound much, but can mount up as you grow.
Are You a Lucky Winner?
Some people are lucky enough to win the capital they need to get their business started. You would have to be very lucky to win enough on the lottery with the odds being against you, but the guys at FSF have put together a list of some of the best casinos, which could give you a better chance.
There are over 200 different government grants available for small businesses, although a lot of them can be a challenge to get. Most of them are for new start-ups, the idea being to help create jobs and boost the economy.
Crowdfunding could be a good way for you to raise capital. Your pitch has to be appealing enough to tempt people to pledge money, as with most crowdfunding sites, there is no return on their investment. There is somewhere you can promise rewards to people that pledge money if it is successful.
Angel investors are usually looking for more than just good ideas. They will want to know there is experience in the chosen trade or profession, and enough research has been done to ensure the projects works. They usually own a part of the business, getting the return on their investment from its success, which is why the team behind the project is as important as the product or idea to most angel investors.
Other Ways To Borrow The Money You Need
The suggestions above are not the only ways to raise funds for your new business start-up. Some people will borrow on credit cards and others will borrow from their friends and family. Whatever way you achieve the finance you need for your business, we wish you every success.