Launching a new business idea is an exciting time, but it can be very stressful. Coming up with a new business idea is the easy part, and every decision that you make after the initial notion hits you is going to be a factor in your success or failure. Budget is always going to be a major concern.
Finding the right way to fund your startup launch should always be your first priority. Without a budget, your business will not be able to hire people, buy supplies, or rent premises. If you have the best start-up idea in the world and no money to see it become real, then these funding ideas could take you to the next stage of your start-up.
Use your own money
This is sometimes referred to as ‘bootstrapping’ where you use your own money to build your business until it starts to generate a profit. This is becoming far more common, and does have a number of benefits:
- You keep control of your company
- You find creative solutions to business challenges rather than solving them with money
- You will have a greater appreciation for your customers
- You will learn about every aspect of your business
Bootstrapping is useful and beneficial to consider. It may not be for everyone, but it is a good way to learn the ropes of business management.
You could, of course, apply for a small business loan through the government, but this will often have interest rates and credit checks that may impact your start-up negatively. There are still ways to get help from governmental sources. Check to see if your business will be entitled to any tax breaks or cash incentives.
If your research and development team needs some investment, there are a number of R&D grants that they may be entitled to, and these are often tax-free, and you don’t have to pay them back either. Government funding also looks good when you’re discussing your start-up with investors later down the line, or when you’re haggling prices with suppliers.
There are three options if you decide that you cannot move your business forward without some form of cash injection.
- You could apply for a bank loan, although you should expect to have to go over every detail of your business plan in order to prove yourself a viable borrower. Bank loans are the traditional way to get business funding, but they are becoming less common.
- Many people borrow from friends and family, although this comes with some risk. Firstly, there’s the risk of damaging your relationships with them long-term. You might also end up giving them a controlling stake in your business, so consider this option carefully before moving forward.
- Finding an investor is not as difficult as it used to be, although you will pay in the long-run. Look at angel investors if you need a cash boost, but remember that you will often be losing some element of control of your future.
Finding new sources of cash for your start-up is going to be one of the biggest challenges that your business will face. Make sure that you look at all of the available options and explore ways to reduce your overall spending until you have a reliable cash flow.