You may be more than ready to leave the rat race, but one look at the state of the economy, and you may be tempted to stay where you are. After all, if everyone is saying they have no money, how can you possibly get the funding you need? And after that, who will have the money to buy your product? One thing to remember is that here in the UK, small businesses are the economic backbone. This is because they create jobs, drive growth and open new markets. They also encourage competition via innovation, which inspires others to adapt and flourish.
Alternatives to Traditional Bank Loans and Credit Cards
Just because the traditional funding avenues may be being cautious these days, doesn’t mean there aren’t alternatives.
Crowdfunding
This funding source is gaining plenty of momentum. Today, crowdfunding sites are requesting money for virtually everything under the sun, including starting a business. The idea is for many individuals to donate a couple of pounds toward a financial target that you set. Creating a crowdfunding campaign requires a willingness to be very vocal about what your business is about. Think of it as giving an elevator pitch to a bunch of strangers. You’ll need to be prepared to answer questions about your business from potential investors.
Business Angels
These individuals are not associated with any company; rather, they put forth their own personal capital to help start-ups raise money. This route will involve the angel receiving a portion of the ownership of your business in exchange for what they invest. It also represents a more structured funding alternative, as most angels will expect to see a return on their investment before a certain amount of time has passed. One of the benefits of seeking a business angel is that most of them were or are business owners themselves. This means that they may also be able to offer you business advice.
Venture Capitalists
Although the term is sometimes used interchangeably with ‘business angels’, the venture capitalist represents an entirely different level of funding. Venture capitalists are usually entire firms made of professional investors whose money comes from a wide array of sources, including foundations and pension funds. These individuals are on the lookout for businesses with a potential for high growth. In exchange, they will expect shares of your company as well as some say in how it’s run.
Getting a Campaign Together
To pursue any one of the above funding sources, you’ll need to create a campaign. Any campaign used for business fundraising needs to have two vital ingredients: it must be attention-getting and must have a compelling story told in a clear and unique way. Your campaign needs to demonstrate not just an idea, but as many traits that investors are looking for as possible. You must be able to show how your business solves a painful and common issue, be able to demonstrate demand for your product and have several competitive advantages.
You’ll also need to ensure you do your homework and prove its financial potential. The current economic climate means that there is a smaller pool of capital for you to access and more entrepreneurs who will be competing for that capital. This means you’ll need to invest a lot of time and put much effort into communicating effectively with your potential investors. This means telling your story in several equally compelling ways, such as your business plan, elevator pitch and financial forecast among others.
The most important thing to remember in this climate is that there is no time when funding is ever easily obtained. You will have to be patient, as it may take longer than usual to get the funding you’re after. But by persevering and keeping your eyes on your goal, success will surely follow.