According to a Geniac study, British startups typically launch with a £5,000 budget. They will, however, spend over £22,000 in the course of their first year. In comparison, small businesses tend to require a more significant investment to launch, preferring to secure £50,000 or more. While a lot of new entrepreneurs would prefer the simplicity of self-financing through personal savings, the truth is that personal savings are often insufficient. So how can you secure funds for your small business?
#1. Create a business plan
The rule number one of building a successful business is to establish a clear and realistic business plan. Your business plan will serve many purposes. First of all, it is a document that will ensure the viability of your business idea and your understanding of the market. Ultimately, the business plan acts as a roadmap to market, establishing which activities and processes are necessary and defining costs, timelines, and growth forecasts. Whether you wish to apply for a commercial loan or to seek financial support elsewhere, your business plan will help you figure out:
- How much your business needs
- How your business will use the funds
- How long it will take to become profitable
#2. Research the most relevant commercial loans
New entrepreneurs can feel overwhelmed by the commercial loan market. However, as a small business venture, you need to identify the most relevant loans for your situation. Small business loans are available as secured and unsecured options and suitable for sale traders, small limited companies, and even new ventures. Yet, when eligibility criteria require trading history or a good credit score, new business owners can find it hard to apply without a guarantee. You can support your loan application with a bank guarantee. Even though the bank guarantee price can seem high at first, the process can give you access to more affordable loans.
#3. Apply for a grant
What if loans are not the right solution for you? The UK provides considerable support to small businesses via a series of grant funding. Unlike a commercial lown, which requires repayment, you don’t have to pay grants back. Startup grants can be available from the National Lottery Heritage Fund for projects that support the local economy and develop new jobs. Innovate UK supports the development of new ideas that will encourage a world-class research base in the UK. You can also consider regional grants in England, Scotland, Northern Ireland, and Wales.
#4. Crowdfund your business
Angel investors are only one click away. Crowdfunding platforms such as Crowdfunder enable new or seasoned entrepreneurs to secure the funds they need. While there are platform fees associated with the process, the platform can help launch ventures that would, otherwise, have been turned down by traditional money-lending institutions.
#5. Start it as a side hustle
It takes time to build a profitable business. That’s why a lot of entrepreneurs start paving the way to success with a side hustle venture. A side hustle allows you to build your presence while maintaining a regular source of income through your day-to-day job. In other words, you can gradually earn enough to establish your brand and build growth.
Securing funds for your business is one of the most difficult challenges for new entrepreneurs. But don’t let it affect you. With a business plan in hand, you can take control of your financial stability and determine the best approach for your venture.