start up cashIf you’ve got a great idea and you want to turn it into a business reality, you’re going to need the start up cash to make it happen. Not every business owner has property available or that they want to use to secure lending, and it has been a long time since new companies had to rely solely on the interest of the right investor to get their business off the ground. From crowd-funding to straightforward finance options, there are a huge range of ways to get the money you need to drive your business forward. Here’s a list of 9 ways you could finance your start up.

1. Business loan

Business loans can be a great option for short term funding. Try and find the right loan that will work with your business set up and needs. Short term business loans can be flexible in duration and in the security you require to make the loan possible. If you aren’t keen to secure your lending against your real estate, consider a stock loan or unsecured lending option.

2. Invoice finance

If you have fulfilled orders that have been invoiced and you are waiting for payment, then invoice finance could provide a cash injection into your business by advancing you those funds. New businesses are cash hungry and require smart cash flow management to support their growth. Use cash flow forecasting to help you identify when a product like invoice finance could bridge the gaps in your capital.

3. Product pre-sales

If your business is going to sell a product and you know there’s going to be high demand, product pre-sales can be a great way of raising capital.  By pre-selling off an advance batch of product you can raise the funding you need to support stock purchase and production costs. Make sure you set clear dates for product availability and that you build plenty of room into your timelines for glitches and challenges at start up. Your new customers are a great source of funding but you don’t want them to become a source of bad press if their products don’t arrive on time.

4. Angel investors

Angel investors specialise in investment at the early stage of the growth cycle in new businesses. They usually expect to acquire a share of your business in return for their investment, and will also share their expertise and skills with you to support the growth of your business. Angel investors expect to see a strong return on their investment – usually between 20 to 25%.

5. Venture capitalists

Venture capitalists have a focus on the speed of return, so while they may be happy to invest they tend to want to know what your exit strategy is before they commit. You can expect them to be looking for a return on their investment within three to five years of providing funding.

6. Crowd-funding

Crowd-funding makes it possible for large numbers of small investors to collectively raise the start up cash your business needs to grow. There are a number of different crowd-funding platforms that could put you in front of your target audience. Take the time to read the small print – it can differ broadly by organisation – and consider what you will be offering to your crowd-funding investors. Crowd-funding could be in exchange for rewards, products, or a share of your business.

7. Other business income

Whether you have another business on the side or you have a skill that you can sell to support your new business’s running costs, other business could present a source of income to suit your needs. Take a look at your day job (from before you set up your business venture) and consider whether it’s worth maintaining your income stream to support your new business. Of course this will involve some compromises with your time and availability.

8. Winning a contest/award

New and small businesses are an important part of the economy and are recognised as such by the companies that supply goods and services to them. One of the ways this recognition emerges is in a range of contests and awards from banks, telecommunications companies, government agencies etc. If you’re starting up a business it’s worth reviewing all the potential awards available and seeing if there is an opportunity for you to boost your funding while gaining recognition for excellence.

9. Grants

Specifically focusing on either a certain type of business owner or a certain type/sector of business, grants can be a useful source of income for new businesses. Invest some time in desktop research to identify exactly what is available to you and how a grant could boost your working capital.

Great working capital gives you the power to move your business forward quickly, but remember you could always choose to be a ‘bootstrapper’ and find ways to manage your existing funding to progress your business at a slower pace. You patience might pay off in the long run when you maintain full ownership of both your company and the potential rewards.

There are a wide range of funding options available to small businesses in their start up phase. If you’re in any doubt about which would work best for you then we suggest you consult an expert who is able to understand your current position and goals, and determine the best option for you in the longer term.

Introducing Fifo Capital

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