Starting your own business is an exciting venture, however you need more than just a great idea and boundless enthusiasm to get your start-up off the ground: you also need money, and plenty of it. Having the money you need in place before you get your business off the ground is the best way to give your business a healthy foundation, but as many entrepreneurs will tell you, raising the money that you need to launch your great idea is often the hardest part of starting your own business.
Ideally, before you start up your own business you should ensure that your own finances are as strong and robust as possible, because the first two years after you start up your own business are likely to be the toughest two years of your life, from a financial point of view. Ensure that you have enough savings to cover your rent or mortgage for a month or two (in case you don’t make enough profit to cover the bills in those early months) and that you have cleared any existing debts, or have a plan to clear any existing debt as much as possible. Once you have your personal finances in order, here are a few hints and tips on how to raise the funds you need for your start-up business:
Pitch to Your Friends and Family
One tried and tested way to raise funds for your start-up company is to pitch your new business to your friends and family, and ask them to invest in your new business. Because they like and support you, many of your friends and family members are likely to want to help you: however it’s important to remember that their support will be largely financial as, unlike venture capitalists and angel investors, they are unlikely to be able to offer support with marketing, office space, or other common problems faced by new start-up businesses. If you are looking for investors that can offer solely financial support, however, and are prepared to take a step back and let you run your business independently then certainly pitching to your friends and family is a great first approach. If you would prefer financial investment that comes hand in hand with practical support then it might be a better decision to pitch your new business to any compliant venture capitalists: as well as offering financial support, they can also bring valuable experience and strategy models to your business.
Gain The Support of Your Client Base
If your business idea is innovative and exciting, then it is likely that you will already have a base of clients, distributors, or other strategic partners in place who would stand to benefit from your solution. If this is the case for your business type, then one model for raising start-up funds is to ask those who would benefit from your solution to help to foot the bill: this could be by offering the support of their existing marketing teams, sales teams, technical help to get your proto type to beta or with a strategic injection of cold hard cash. It is certainly worth approaching established local businesses within your area of interest and seeing if there are any mutually beneficial ways in which you could work together. From the point of view of those potential partners you approach, There is something that is very appealing about being getting on board at the early stage and being part of a local startup’s success-especially when that start up is in your own backyard.
Establish a Line of Credit
Although it isn’t the best long term policy, and certainly shouldn’t be your only funding strategy, it is certainly worth approaching your own bank and establishing a line of credit with them for their business. Your bank could either offer you a business loan, company credit cards, and a business overdraft on your business bank account. Having credit in place from your bank gives you a safety net if and when you have a bad month, and also gives you the security of knowing you have extra funds in place should an unexpected business emergency arise.
Article from Gemma Graham