There are now many routes to fund your business. A business owner can either access funding through grants, equity investment, or borrowing. There are advantages and disadvantages to funding options so today we will run through the options that might best suit your business’ situation.
Equity funding
Equity funding involves giving a percentage of your business ownership to an investor. In exchange, you will receive funding. In order to pitch to an investor, you will need to make your story as accurate as possible and spend time collating all the information and statistics needed to convince an investor that you are worth their time and money. This is a similar situation to the format of the popular television show Dragon’s Den, and the conclusion of The Apprentice! Investors tend to favour rapid growth for a quick and substantial return on their money. You will need to show your future potential and plans, not just your business’ previous history.
However, you must also remain mindful that whilst your business might not be the right fit for every investor – not every investor will be the right fit for you! It can be a long process to find an investor that you think aligns with your business interests before you get the chance to make your pitch. This is something that should not be overlooked or rushed, as choosing an investor is an important relationship in business growth going forward.
Borrowing/loans
Borrowing money is an option that gives you the most control over the funding you receive. You can decide how much of a loan your business would need – and then pay this back over a given period, with interest. This a popular option for many businesses nowadays, as it offers lots of freedom, flexible repayment options and competitive prices.
It is important to consider the risks involved with taking out loans. For example, interest rates can change, meaning the amount you pay back can change over time. Borrowing money means that you are solely responsible for paying this back, and you do not want to end up missing payments or monitoring the loan incorrectly! Some loans may also require a personal guarantee, and this can affect your personal credit rating. Whilst the bank is a popular option for receiving a loan, you can also contact lenders who may be interested in what your business has to offer.
Grants
Grants are given by the Government to businesses that they feel are deserving. If a business is deemed beneficial to society like, for example, a business that promotes sustainability or research, then the likelihood of you receiving a grant is higher. Grants are usually for a specific project or purpose and to win one, you will need to make a strong case for why your business deserves the money.
This can mean that the application process can be lengthy, and you might not necessarily be successful. You must meet the criteria given for the grant you choose and be mindful of the budget you will need to create.
There are many options to consider when looking for funding for your business. First you must decide if you want control to lie with investors or someone internal to your business who can deal with the finances of a loan. It is important that you research every avenue available to you, to ascertain what kind of funding would be best for you. Explore what’s available to you and decide how you will budget funding as well as the savings that your business already has. Remember to stay cautious with your decision-making but ambitious with your plans! These things can take time and you need to ensure you are choosing the best possible route for your business’ future!
If you have any questions regarding business growth and need advice or more information on this subject – don’t hesitate to contact us at info@futute-cloud.co.uk.
