Congratulations, you’ve got a plan for a new business, and you’re ready to start making a profit in your local area. You’re probably raring to go, with a million ideas on how you can reach out to your target audience and start making a name for yourself in your chosen niche. Unfortunately, before you can start setting the wheels in motion, there’s one final thing you’ll have to do: find your funding.
Finding funding for a local business can be extremely tough. After all, it’s hard to convince a bank that they should trust you to make repayments on your loan, when you don’t have any hard evidence that your company idea will work. The good news is that there are options out there if you’re willing to look for them. Here are just some of the ways you can find the funding for your new start-up.
Deciding what you need
Remember, before you can start searching for the right funding options for your company, you’ll need to think about how much cash you’re realistically going to need to get started. For instance, you might need a business office or premises – that’s something that Brian Weal’s company Swan Group Holdings can help local start-ups achieve.
You’ll also have to think about insurance, office equipment, the initial cost of buying materials to make your product, and so on. Create a list of all your expenses so that you’re ready to approach any investor or funding company with the information they will need when considering whether to back you.
Borrowing from family and friends
You’d be surprised how many small companies start with support from the bank of mum and dad. When you’re not sure whether you can go to a bank for the cash you need, there’s always the option to ask your friends and loved ones whether they’d be willing to invest a little bit into bringing your organisation to life. Remember, you’ll need to treat your friends and family with the same level of respect you’d give any investor – they won’t appreciate being taken for granted.
Create a business plan, and be ready to make your case, showing how long you’re going to need their money for, and how you’re going to use it to grow your venture. You’ll need to convince them that the investment is worth their time.
Try a start-up loan
It’s notoriously difficult to get a standard loan for a business in the UK. You’ll need an incredible credit rating, and you’ll also have to spend some time shopping around to make sure that you get the best deal. Before you rest all your hopes of a successful business plan on a bank loan, consider a specialist “start-up” loan instead. Start-up loans in the UK can be government-backed, which means that you have a better chance of obtaining the support you need.
When it comes to applying for such a start-up loan, you’ll need to work with a mentor to create a plan for your company, then pitch your idea to a panel to convince them to allow your loan. Every partner or owner in a business will be able to individually apply for up to £25,000 for initial business expenses, with a maximum loan for £100,000 per business. Keep in mind that this isn’t a grant, you will need to pay the loan back, usually within five years.
If you’re successful, you might even benefit from some free mentoring and business offers to help you launch your company.
Consider crowdfunding and local schemes
If your friends and family don’t have enough spare cash to support your business dreams, and you’re unsuccessful with procuring a start-up loan, there are still other options out there. For instance, crowdfunding websites are becoming increasingly popular, with sites like Kickstarter, and CrowdCube helping modern organisations get the support they need from interested investors.
There’s also the opportunity to check out local schemes that might be aimed at start-ups in your area. The government business finance and support finder for your area can assist in showing you what kind of grants and loans are designed to help people in your situation.
Launching your start-up
“Launching a successful start-up business isn’t always easy. There are a lot of complex expenses to think about”, says the director of well known SEO Brighton agency Trilobyte Digital. “Fortunately, with a little planning, and a good idea of the financial options that exist in the UK today, you can make sure that you’re ready to establish a thriving business right here in Brighton.”