Few profitable businesses can be started without pouring a bit of money in first. Whilst you may be able to set up an online business from home relatively cheaply, other business ventures such as setting up a shop or a restaurant are likely to cost a lot more. There are many ways of gathering the required funds. Here are just five effective methods to consider.
Save up
If you’ve got the patience and willpower, you might be able to save up the required funds. Unlike other methods of funding, you won’t have to pay out interest or offer shares. It’s worth opening a special savings account with a high interest rate to help you save. Some banks offer special business savings accounts with favourable rates.
Take out a loan
Another option could be to take out a business loan. This could quickly give you the funds to get your business up and running. Bank business loans are likely to have low interest rates, but may take several months to process and may require you to have a good credit score. Online startup loans may be better suited to some people – strategies such as peer to peer lending allow you to borrow money from online lenders instantly, although higher interest rates may apply if your credit score is low.
Use a revolving line of credit
A revolving line of credit is like a loan, except you only have to pay back what you spend. You’re given a limit as to how much money you can borrow – an amount that you can keep dipping into as you start up your business. This might allow you to borrow the exact amount needed, rather than taking out a regular loan and ending up with surplus cash which you still have to pay interest on.
Seek an investor
You could also consider borrowing money from an investor. This could be a person or an organisation. The exchange for them giving you money is the promise to give them a slice of any profits in the future. Getting someone to invest in your business isn’t easy and it may require a good pitch that proves you’re a potentially profitable company. Some investors may want to be hands-on – they may be able to offer business advice as well as funding your startup. Other may prefer to stay out of your business.
Crowdfund
Crowdfunding involves raising small amounts of money from lots and lots of different people. These people are all given a tiny share in your business as an exchange. Crowdfunding could be a great way of raising a large amount of money that might be too much of an ask from a single investor. There are lots of sites online for getting involved in crowdfunding. This can be a slower form of funding as you have to wait until enough people have contributed money to make up the total cost.
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