Young Entrepreneurs: How to get financial help for your new business venture +
Age should hold no barriers. A great idea is a great idea, after all they are the seed that helps all new businesses grow. Young entrepreneurs armed with an idea, passion and determination can fall short if they’re unable to secure their start-up funding. The challenges facing entrepreneurs in their early years can cause them to halt at the first hurdle. Not only does this mean a good idea doesn’t make it in to business, but it could lead to the state of start-ups dwindling.
Turning your dream into a reality shouldn’t be met with limitations, stopped by the lack of funds, assistance and advice. Finding finance can prove troublesome. A cash injection is necessary to kick-start your new venture, but where do you begin? Firstly, draw up a business plan and work out how much money you need to set-up, develop and run your trade in year one and two. From here you can work out how much money you’ll need to drum-up. But, where do you find cash for your start-up? Here are some options to explore:
Crowdfunding - Stand out from the crowd.
What’s the big idea? Crowdfunding, of course. It’s existed as a method of raising capital for almost a decade. How does it work? Quite simply, by the entrepreneur pitching their idea to a wide audience with a view to obtaining a collection of funds from a number investors. There are several internet platforms that entrepreneurs can use, some of which can be found on Forbes’ Top 10 Crowdfunding Sites for Fundraising article. Sites work differently, but each investor is essentially buying a stake in the business with the hope to one day see a profit. One site, Kickstarter, is set-up to enable businesses to ask for other contributions, big and small. You can ask for contribution to cover anything, from the cost of small business office space to the cost of ordering and shipping products. The possibilities for entrepreneurs seeking crowdfunding are endless.
Angel Investors - Does an angel contemplate my fate?
Angel investor – the name on every entrepreneur’s lips. Ideally this should be your first port of call. Although crowdfunding is proving particularly successful, there is still a place for angel investors. However, it can be notoriously hard an opportunity to secure. You can find an Angel by simply networking, or searching on the many Angel investment association websites.
An Angel will make their own decisions as to whether to invest in you and your product. In exchange for investment, an Angel would typically take shares in the business in return of equity. It’s important that the Angel you do business with is not only a financial asset, but also someone that can provide you with the expertise and knowledge to help you run your business. They can turn your growth potential into a reality. By providing the finance, skills, advice and the right market contacts you can develop your business idea into a profitable success.
Bootstrapping your business - Funding it yourself
Traditional sources of financing your business do take some time and research. Whilst optimism and persistence can get you relatively far, new small businesses can struggle to secure the credit they need to get them off the ground. Starting a business on very little money can be done – in fact this is how most begin. If you’ve exhausted all other avenues, or you’d rather just go it alone, then why not try bootstrapping.
It’s all about using ‘creative’ ways to utilise the finances that you have, whilst minimising your outgoings. Learning the art of being a ‘Bootstrapper’ is the first step to starting your business on a shoestring. Believe it or not, the less money you have to begin with, the more determined you’ll be to get stuck in from the beginning. If you’re keen to go it alone, then that means you’re prepared to rely heavily on savings, penny pinching and cash flow from early sales. Careful management and monitoring your financial resources should help you keep your spend to earn ratio level.
Loan ranger - Start-up loan
Sometimes the only way to get help, is to ask. You’ve got the idea, you written your business plan and you’re ready to go. But, there’s one thing holding you back – you’ve not got the finances in place to get it off the ground. A start-up loan can give you the financial support you need to kick start your business. Whether you opt for a government funded loan or opt to go through the Prince’s Trust or similar foundation, you can borrow what you need in order turn your idea into a reality.
Michael Fallon, Business Minister for The Department for Business Innovation & Skills, Start-Up Loan Scheme, said: “Start-Up Loans are firing up thousands of aspiring young entrepreneurs’ business ideas. This scheme is really motoring and its high demand and popularity shows no sign of abating. This is about encouraging and unlocking the great entrepreneurial spirit we have in the UK.”
There are a number of options to choose from when it comes to funding your business. Whilst you might be keen to get your business to market quickly, it’s important to opt for the backing that will stand you in good stead. Whether you opt for one of the above, or a more traditional route of raising capital, you’ll need to demonstrate the value of investing in your company. The next step is to review all channels and decide which one works best for business needs. A carefully chosen lending source can help elevate your business to where it needs to be.