The ultimate guide to financing your startup dreams
If you’ve recently waved goodbye to your full time job, excellent promotion prospects, the camaraderie and banter of your office colleagues and a steady wage, you might be feeling a little daunted by the startup road set out in front of you. At the beginning of this long journey to entrepreneurship, there will inevitably be hurdles for you to get over.
You need to formulate your business vision, implement a marketing strategy, possibly hire employees, hone your online presence and source premises for your new startup. However, the most paramount task is to secure financing for your new business venture. Without this, your startup has little chance of being one of the twenty percent to survive its first year of trading. Take a look at this ultimate guide to ensure that your cash flow remains buoyant, and your business stays in the black.
The bank
The traditional method of funding a startup remains heading to your local branch of bank and meeting with the manager to try and secure a loan of some sort. Banks need to see a comprehensive business plan complete with financial forecasting and evidence of your current financial situation. You need to prove, not only that your business is a sound investment, but that you are too. Ensure that you keep your debts to a minimum, that you pay your credit cards on time each month and that you don’t venture into your overdraft.
A bank loan can be favourable to other short term loans, and you will have a regular and manageable amount to pay back each month. A large loan could help you purchase equipment, stock or pay the lease on any premises you may require. Meet with a financial planner or Xero accountant prior to seeing the bank manager to formulate a plan for the money that you seek to borrow. It’s imperative that you can explain to a bank manager exactly how the money they are lending to you will impact on your startup.
Business angel
Far from being celestial beings, business angels are exceptional sources of investment. These industry experts who have personal wealth to invest are keen to take a more active role in smaller enterprises. If you can secure a meeting with a business angel, make sure that you take advantage of every second you have in their presence. A business angel will be keen to get to know you as an individual and will want to assess your business acumen and skill set. You may have the greatest product to bring to market, but you need to prove to the business angel that you are the individual to oversee the product launch.
Dress smartly, be confident and enthusiastic, and speak in an engaging tone. If you are passionate about your business idea, a business angel will be more likely to invest. It’s vital that you are open to not only their financial investment but also their time and experience. Having an industry expert on hand to offer advice and contacts can be invaluable.
Crowdfunding
If you are eager to exploit more twenty first century avenues of funding, you might be keen to explore the crowdfunding route. Websites now welcome individuals and startups to publicise their projects in an attempt to attract investment. Anybody can invest from the layperson with no business knowledge whatsoever to the multi-millionaire business backer. You need to explain your business vision concisely, demonstrate why your business is a viable and worthwhile enterprise and convince potential investors to part with their cash.
You can incentivise with discounts for investors, a free sample of the product or even shares in your startup. Crowdfunding isn’t just a solid route for investment but also for publicity. It only takes a few of your investors to share your company details on their social media channels before you find yourself at the centre of an online buzz resulting on more interest and investors from all over the globe. A click here, a new follower there and a share now and again can work wonders for getting your brand well-known.
As a startup, there will be plenty of well-established competitors that have already found their niche within your market. It is your job to demonstrate your credentials as a potential industry rival. You need to price your product competitively, get your brand out at trade shows and fairs, and start to hone your online presence. With a sound business vision, an exceptional marketing strategy and adequate funding, you can turn your business dreams into a reality.
