Financing is one of the biggest hurdles that small businesses face at the point of establishment. It is not enough to have a good business idea and an accompanying plan to set it up, funding is essential to get your business running.
This article details the most efficient ways of funding your small business.
1. Savings
Starting up with personal savings, is usually the best option available to every entrepreneur, as it gives you the chance to start on a sound footing without debt. You do not need to seek funds from anyone, which affords you full control over your business early on. Avoiding early debts also mean that you do not give equity away until you are sure the time is right.
Also, there is a sense of commitment that comes with putting your savings into your business. This will make it a lot easier to convince investors to put money into your business, should the need arise later.
2. Family Loans
If your savings is not enough to start your business, taking a family loan is a good option. Your family and friends are usually more willing to trust you with money than anybody else. The loan repayment plan is usually flexible and negotiable. Also, interest rates on family loans are low, if any. It is better to get funding from your family and friends to set up your business, before building up to the point where other funding is easier to get. While taking family loans is quick to obtain and flexible, the terms of the loan must be stated clearly. Stating the terms of the loan clearly, will prevent any disagreement and keep personal relationships intact.
3. Bank Loans
A bank loan is another viable option available for funding your small business. If you have a good credit score, you can get a loan with low-interest rates. For bank loans, you do not have to give up control of your business, which is advantageous in the long run. All you need to do is come up with an impressive business plan that is presentable and well-detailed. The process of getting the loan might, however, be time-consuming and prolonged. There are different types of bank loans available with different interest rates and terms, so it is important to research before choosing your creditor.
An experienced accountant will give all the information and financial advice you need to make the best decision. FindUKAccountant.co.uk can connect you to the best accountants around you when you need a loan.
4. Crowdfunding
Crowdfunding is a funding option that sees you raising online from the public. There are two major types of crowdfunding, which are debt crowdfunding and equity crowdfunding.
- Equity Crowdfunding: This is a type of crowdfunding in which you offer people business shares in exchange for investment.
- Debt Crowdfunding: This type of crowdfunding entails paying back the money gotten from investors with some interest.
Both are good arrangements depending on the structure of your business. Crowdfunding requires a lot of publicity, as it may take a while for you to reach your target. Your business plan must also be attractive enough to convince your target audience to invest in it. Before you set up a crowdfunding form, you should discuss the pros and cons of a seasoned accountant. Your accountant will also help you choose the best arrangement for your business. At FindUKAccountant, you will be connected to top accountants close to you to help you choose the best crowdfunding arrangement for your business.
5. Angel Investors
Funding from angel investors is different from other options already discussed, as shares in your business are always required. Angel investors are groups or individuals who fund growing businesses in exchange for equity. Angel investors provide money to start up your small business and useful business advice from years of experience in your industry. The downside to this option is that you do not retain total control of your business. It is, therefore, important to weigh your options before considering angel investing.
6. Venture Capitalists
Venture capitalists serve as investors, operating in a capacity similar to that of angel investors. In this case, the difference is that venture capitalists usually offer a more substantial investment, as they are committed to helping the business grow quickly. A fast-growing business gives venture capitalists returns on their investment within a short period. Like business angels, venture capitalists offer business expertise and connections that will benefit your enterprise. With venture capitalists, you may be required to give up a lot of shares in your business in exchange for the substantial funding.
7. Government Grants
You can get funding for your small business from government grants. The Research and Development Grants is a way for the UK government to help entrepreneurs set up their small businesses. The free grant is set up to aid the development of new businesses in specific industries and regions. You get to keep the grant as well as full ownership of your business. The grant comes either as a reduction in tax liability or direct cash funding. All you need to do is meet the criteria set for funding. A qualified accountant will put you through all the government grants’ requirements and the one suitable for your business.
Get in Touch with The Best Accountants in the UK
There are many options to finance small businesses, but your specific type of business determines the best one for you. You could benefit from advice from professional accountants who have helped start businesses like yours. FindUKAccountant connects you with accountants in your area with the expertise and experience you need to bring your business idea to life.
Start by filling our form on the homepage, and we’ll match you with five accountants that are close to you. We understand that you might not have a large budget as a startup, and this is why we use some healthy competition to give you the best prices. Visit our website at findukaccountant.co.uk and fill the form with your requirements.
Disclaimer: We don’t take any responsibility for actions taken based on above information. Please speak to our consultants if you need more information. This guide was written specifically for FindUkAccountant clients. By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details are correct at time of writing.