Funding a new business venture

While there were many negatives to come out of the recession in the UK over the past few years, the one big positive is the number of small businesses that have been created from the ashes, and overcome the hard times to aid the economic recovery. In the face of unemployment, new businesses have been created from ideas, and these then in turn create job opportunities for others. If you have a great idea for a business, have done the market research, and are prepared for at least a few months of hardship during the initial set-up then you will need to start looking for funding. Here are a few methods you might use to get enough cash to set up.

Shares

One option you might choose to raise enough money to start your business is to sell parts of it as shares to friends and family who would invest in you. This way, if you do well, they will have a share that is worth more than their original investment, as a reward and thank you for putting up the cash to get your business off the ground. If you can’t raise the cash this way, then there are schemes such as crowd funding online, and business angels where you can find investors to buy shares to help you start-up. Any shareholders will part own your business, and depending on the size of the share owned, will have a say in the running of your company.

Loan

One of the most common ways to fund a start-up business is to take out a loan from the bank to cover the upfront costs. Most banks offer specific business loans and rates, and they will expect you to be able to provide a good overview of your business, as well as projections for profits for the coming years. You may have to secure the loan against your home or car as collateral should you fail to make repayments. Mixing business and your personal life can cause problems, so consider all options before committing to tying these aspects of your life together in your finances.

Government

The government are very much behind start-ups, as they help to boost the economy. In order to back up their support, they have created a number of initiatives that provide an initial cash injection for new businesses. These schemes are dependent on the type of business you are setting up, as well as your personal circumstances. This is a good place to start your search for finance though, as the rates are preferable to the high street banks. Search online for any that may be relevant to you.

Remember, when applying for or sourcing finance that you need to factor in all your start-up costs, not just the biggest. A location is important, but so are the tools you need for the running of the company, bills, transport to meetings and many other important things like business insurance that simply cannot be forgotten. Work out a target figure first, then, choose a method of funding that works for you.