5 ways to fund your new business
Let’s break down some of the most commonly used sources.
These are wealthy individuals that can offer funding in exchange for a share of equity in your business – just like Dragons Den.
Most of these investors work on their own, whereas some work together to provide a larger sum of funding. Although this will involve parting with some control of your company, you will receive the necessary funding and you’d also get that wealth of knowledge that comes with these investors – as they will be able to offer you valuable advice and guidance as they’ll likely have experience in your industry sector.
Bank loans are a long-term source of finance as the loan is often provided over a fixed period. Loans from the bank are good for financing investments in production capacity e.g. your new equipment or your first shop, as you can often get a lump sum (assuming you have strong enough collateral or aren’t deemed as too risky for the bank).
Obviously, all business owners would love huge sums of money being put into their bank accounts, but bank loans aren’t that simple. Although they are generally lower than that of an overdraft, loans still come with interest rates which will increase your costs.
Furthermore, ever since the credit crunch loans have been harder to be accepted for, and with the uncertainty around the effects of Brexit, this might not get any easier any time soon.
The idea behind crowd funding is about raising capital needed through lots of smaller donations, from larger groups of people. There are new crowd funding websites popping up every day, more popular ones like Kickstarter, GoFundMe and Indiegogo all work the same way.
Submit your project with a little bit about your business, your funding goal and the time limit you wish to hit your target, and if enough backers take enough interest to donate, you could be well on to hitting the amount you need.
There are hundreds of government grants available in the UK – some cover specifics like helping to fund new premises and equipment, whereas others are grants for general business start-ups and growth. Grants can be quite complex, and each grant will have its own specific requirements for applying, so make sure you do your research beforehand to find one appropriate for your business.
Even though there are hundreds of grants available, there are even more businesses applying for them, so competition is quite stiff and not everyone qualifies. However, if you do receive a grant it’s essentially free money as you don’t have to pay any investors back or give up equity in your business.
Enter The Northern Business Expo’s £5k Pitch
If you’ve got a new and unique business idea you’d like to get off the ground, enter our “£5k Pitch” competition. Taking place during the event at Manchester Central in March, participants will have the opportunity to pitch their idea to a panel of expert judges to be in with a chance of winning £5,000 to fund their business, plus thousands of pounds of business products and services – ranging from accountancy services to software packages – to help your idea into a business.
Take a look at the competition page here to find out more and to apply! You'll also need to get a free ticket to the event to make sure you can get in the door!