4 Creative Tools to Fund Your Own Start-Up
It can be difficult to get banks to back any start-up venture unless you have an exemplary track record. According to studies, less than a third of start-ups are funded by bank finance.
This means that you’ll probably need to come up with another way of financing your new business.
The good news is that banks aren’t the only solution, and there is a range of other tools you can explore. Here are four of the best creative means that you might want to consider.
Crowdfunding is a concept which is very on-trend and has been successfully used for many different ventures. Using a crowdfunding site, you describe your idea and ask the public to invest a small amount each so you can get started.
In return for this investment, it’s usual for you to offer some incentive. You can choose what you want to provide. You might start out with a simple shout-out on social media for a small investment, while you might offer exclusive access or branded products for more considerable sums. It’s essential to carefully calculate your exact costs so you don’t end up promising items you can’t deliver.
You should also check the terms and conditions of the crowdfunding site very carefully. Some sites will only allow you to withdraw the cash if you reach your target while others will allow you to withdraw your money at the end of your chosen campaign period.
P2P, or peer-to-peer lending, has been around for a while with platforms such as Prosper and Funding Circle. The idea is simple: rather than borrowing from a bank, you ask your peers to lend you the money. P2P sites facilitate the process, and the lenders have the final say in whether they want to offer you the cash.
You will need to be willing to share your financial information so your peers on the platforms can make an accurate assessment about risk. If you’ve got a poor credit rating, you’re unlikely to be approved as unlike with a bank, these types of loans are funded from a personal bank account. If you default, there will be an individual who is out of pocket; this is why the process of checking your credentials is taken so seriously.
Despite this, P2P lending decisions are often made very quickly, and you could even have the money the same day. The better your credit ranking, the more cheaply you’ll be able to borrow the cash. Different platforms offer different types of lending, but there’s everything available from small business loans right up to large investments worth hundreds of thousands of pounds.
It’s possible to raise cash by making the most of what you have already. The stock market offers ripe opportunities to generate revenue, with financial instruments such as CFDs. When learning about CFD trading, it’s essential to do your homework and take your time before opening your first position.
With a careful and diligent approach, it’s possible to make money in a market, even when the overall trend is down. This is because you can go short on CFDs, allowing you to generate a profit even when the economy is heading south. It is a rare opportunity for business owners, and it’s one of the reasons why trading is attractive to investors at every level.
Business Pitch Competitions
It’s relatively common for business colleges and universities to run competitions for the best new ideas. This is a great way to access funding if you’re a student, but you can still take a similar approach even if you aren’t.
There are frequent business pitch competitions in the market for entrepreneurs to apply to. Prizes typically include not just the cash but also mentoring, advisors and supplementary business services. Even if you don’t win, the process of applying can be helpful in honing your concept and presenting it.