4 Ways to Fund Your Business Idea
Got a great business idea? Great! You’re on the road to achieving the dream of self-independence, personal wealth, and business fulfillment… but it takes a lot of hard work to reach that point, and your passion will only take you so far. Sooner or later you’ll need money to fund your project. Depending on your circumstances, there’s a number of ways you can find support to get your dreams off the ground.
Selling shares
If it works for the entrepreneurs on Dragon’s Den, it could work for you too! If you have friends or family who have faith in your business and spare cash, consider asking them to provide funding in exchange for a share of your company and its profits. Another source of funding is angel investors – just like on Dragon’s Den, there are individuals always looking out for the next big idea with the cash to back you up.
Remember that you’ll have to give up part of your control in the company, which might come as a shock if you’re used to total control. Any investors will have a say in how the company is run, and this can conflict with your own ideas. It’s important to take legal advice before selling shares in your business to help prevent any unexpected complications in the future.
Crowdfunding
In recent years, the concept of ‘crowdfunding’ has become particularly popular – check out websites like Kickstarter for ideas. If your idea has widespread appeal, ordinary people might well come together to provide support. The great thing about crowdfunding is that you needn’t necessarily give up control of your company – rewards for your backers can come in other forms, ranging from advance prototypes to discounted services. If you’re looking for serious cash, you can offer backers a deluxe reward like a personal meeting or direct input in your company’s operations.
Loans and overdrafts
If you’ve got an idea that will bring in guaranteed income, a loan can be a safe bet to fund your business without jeopardising control of your company. The repayments will take a cut out of your profits, but with careful planning you can balance this to leave you with enough to save and re-invest in your business in the future. If you’re struggling to find finance because of a poor credit rating, a personal loan might be a good idea – it’s secured against your home so you’re more likely to be approved.
If you’re not sure how much money you’ll need, you can arrange a business overdraft with your bank. This gives you the flexibility to borrow money at short notice and pay it back without penalties.
Grants and other schemes
Another way to fund your business idea without giving up control is to find out if there are any grants available from the government. These grants come in many different forms. For example, some grants might be set up to boost business growth in your local area. Others are geared towards young business entrepreneurs. Some grants will cover specific costs, like funding to pay the wages of your employees. It’s particularly worth looking for a grant if you’re working in a niche field.
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Category: Business
