How do you raise money in a new business?

raise money

Getting a new business off the ground can come with all sorts of hurdles. From logistical to financial no matter how much you plan everything out in advance it never goes smoothly.

For many new businesses it will be the later that provides the most upset during the early years. Getting yourselves established as a new business with huge financial pressure and extremely tight margins would stress even the best entrepreneur out no matter what the situation. So what options to businesses have when it comes to raising some more capital to keep growing?

Angel Investor

No doubt everyone reading this will have seen the BBC TV Show Dragon’s Den. Well, that entire show’s premise is based on providing angel investors to new startups. There are some great angel networks out there (ie, angels joining in with other angels) that are primed and ready to invest in new businesses. It’s important you have a good business plan in place and are able to articulate how you plan to roll out the business in the years going forward so they can see that decisions are not just being made on the fly when their money is at risk.

Friends and Family

This is one of the most popular ways of bringing additional business into your business. It is a far easier sell as the people more often than not know you and what you have been to and so will have a personal interest and faith in you already that a bank may not. The downside though is that you can feel added pressure because it is people you know injecting money into the business and so feel a far greater responsibility in terms of making sure everything is a success.

Taking money from friends and family isn’t for everyone and it has caused it fair share of rifts throughout the UK when it has gone wrong but from a purely financial point of view it really is a better solution than getting a loan with a hefty APR attached to it.

Crowdfunding

There are more success stories out there than even when it comes to crowdfunding for a business. There are so many great options out there such as Kickstarter, Indigogo and Funding Circle through to even using JustGiving.

If your business is a charity you could even look at using Capital Appeals via Group IFC Captial. These allow you to help fund anything from a new building or extension through to new equipment that you might need for your business.

Bootstrapping

This will only be for businesses that don’t require a huge amount of start up capital. It is often that if you believe in an idea it should be YOU that puts the money in and for a lot of businesses, this is how they will get their capital at the start, by funding it with their own personal finance options. This could be a mixture of savings, 0% credit card deals or very low APR loans. There’s no doubt that this does come with a lot of risk but some would say that as an entrepreneur you should be willing to take the risk yourself before asking others too!

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