The past few years have been a difficult time for business owners, with the global pandemic and rising costs having a huge impact on available funds. But it’s not all doom and gloom! As 2023 sees some market growth, this could be the perfect time to grow your business.
How much money will you need?
Before deciding on the source of your funding, you’ll need to estimate how much money you’ll need. Just some of the basic expenses every business will face include:
– business insurance
– rent and utilities: including energy and council tax
– website development and marketing: this is something you can do yourself but this can take away valuable time from managing the business
– equipment: including everything from office chairs to computers
– patents and licences
– legal costs: you may need to consult a solicitor’s firm, such as Parachute Law, to help you complete documents ranging from an Occupier Waiver form to directors’ guarantees.
Funding your Business
1. Self-finance: Depending on your business expenses, you may be able to use your own personal funds, for example, from savings, to finance your start-up. This option is especially good for businesses with limited starting costs but does mean that your own money will be at risk. This option also allows you to keep complete control over your business finances too, which wouldn’t be possible if you received income from investors.
2. Crowdfunding: Crowdfunding is now a very popular way to secure funding for a new business venture, thanks to sites such as Kickstarter and Patreon. This allows others to invest in your business, in return for free products, discount codes, or acknowledgement once your business is up and running. One of the best-known Kickstarter success stories is Oculus, which creates virtual reality headsets. They quickly exceeded their funding target on Kickstarter and were eventually purchased by Facebook. Kickstarter is especially good for companies selling a physical product, such as artisan craft makers. It also means that you retain full control and ownership of your business.
3. Raising capital through Venture Capital (VC) Investment: One way to grow your business is to invite investors to buy shares in your business. This can be a good way to attract significant levels of funding but can take a long time as investors will often want to see how the business is progressing before they decide to invest.
4. Small business loans: Small business loans are a great way to finance a new startup. Before applying, you’ll need to be able to share documents, including a business proposal and expense projections. You’ll also need to consider if you can afford the repayment and interest rates.
There’s no one size fits all solution for business funding so it’s important to work out what’s best for your individual circumstances.