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Getting funding for your business

Getting funding for your business

Some businesses need more initial funding than others to get them off the ground, often requiring more than one funding solution. It is not uncommon for businesses to go through several rounds of investment throughout the course of their existence.

Let’s say your initial funding comes from an angel investor which really gives your businesses start-up the kick in the right direction it needs. Further down the line, as your business grows, it’s likely you will require even more investment. This time you might consider approaching another angel investor or potentially seeking the backing of a group of venture capitalists.

Knowing what your options are for sourcing funding is crucial when navigating this tricky aspect of business.

The purpose of this article is to cover a range of funding solutions which are currently avaialble for you to consider should you require them.

These options are generally more targeted to people under 30. Of course there is always the elusive ‘bank loan’ that banks are holding tight to their chest currently.  Unfortunately, grants can generally be forgotten about with a few exceptions, which can be found here.

Here is a list of some funding options currently available:  

 

 

Princes Trust enterprise programme – (UK only)

  • The Enterprise programme is for people who:
  • Have a business idea they want help to explore
  • Are aged 18-30
  • Are unemployed or working less than 16 hours a week
  • Live in England, Wales, or Northern Ireland
  • Test marketing funds of £250 which do not need to be repaid to see if your business is viable (obviously this is not suitable for all businesses)
  • Volunteer mentor for 2 years
  • The Princes Trust also offer an enterprise qualification.

From personal experience the loan amounts for the Princes Trust depend on your area of the country. Kent for example in 2012 was limited to around £2,700 per business. The loan rate is 3% and payable over 1-3 years.

Link to Princes Trust Enterprise Programme – http://www.princes-trust.org.uk/need_help/enterprise_programme.aspx

Angel investment 

Of course no angel investor will invest in you if you do not show:

  • You know your market inside and out
  • You have a clear and proven strategy for how your business will make money and more importantly turn a profit
  • Evidence the market exists and that it’s prepared to pay for your product
  • A solid business plan
  • That your business relates to their interests. (Investors usually like to invest in businesses that are of interest to them and also that could “boost their profile”.)

Read our 5 main things that investors are looking for in entrepreneurs.

A great source for finding angel investors is Venture Giant – http://www.venturegiant.com/angel-investors-profile.aspx

Kickstarter 

Kickstarter lets you pitch an idea, ask for an amount you need to fund your idea and then choose how much you need overall, how much you would like each person to donate and what if anything they can get for each donation in return. So for example the first 50 people that donate £1 can get my new album, the first 100 people that donate £5 can get the album plus have 3 exclusive tracks and your name in the credits for making this album possible.  So if we got completely funded we would get £550 to launch our new album.

Kickstarter might surprise you! Fletcher Heisler asked for $800 to be able to write a guide on Python (A programming language.) He ended up with £21,150 and here is the link for you to see how he did it.

As a word of advice – do not go into Kickstarter without a video. You can, (and people do) but you will thank yourself for having a video. A video improves your chances exponentially.  Kickstarter is generally anything tech and it does not have to be specifically web. I would say your project/business does not have to be new either… if you need funding to make something happen and there are people willing to donate to that idea then well… why not?

Link: http://www.kickstarter.com

Crowd Funding

Crowd funding is similar to Kickstarter but the difference is that FundingCircle is:

1.  Currently UK exclusive

2.  Not limited to “techy/digital” ideas

FundingCircle is open to anyone over the age of 18 with a registered business. The idea is that entrepreneurs create a “profile” of them and their business and investors can invest as little as £10 up to the full amount for a minimum of £5000.  There are similar sites online in all different countries.  Fundingcircle is just one popular choice.

Link: https://www.fundingcircle.com

 

New Enterprise Allowance (NEA)

For people on Jobseekers allowance – (UK only)

  • Can enroll from the day you claim JSA as of October 2012.
  • Need to be aged 18+
  • You will get a personal advisor (My advice is to milk them as much as you need, take every piece of advice you can)
  • A weekly allowance worth £1,274 over 26 weeks, paid at £65 a week for the first 13 weeks and £33 a week for a further 13 weeks
  • The facility to access a loan of up to £1,000 to help with start-up costs, subject to status.

The total package of support could be worth up to £2,274 to each participant who starts their own business.

Link: http://www.dwp.gov.uk/adviser/updates/new-enterprise-allowance/

 

O2 Think Big – (UK only) 

Not for businesses per-se but worth mentioning nonetheless! The O2 think big initiative offers people between the ages of 13 and 24 £300 to make a difference in their local community. This could be through creating a mobile app that provides a local service, a website or anything really!  There are very few rules so the only real limitations are the limits of your imagination. Take a look at our interview with one of the volunteers at O2ThinkBig – Click Here.

Link:  http://www.o2thinkbig.co.uk

Start-up loans – (UK only)   

The terms are very favourable (no fee, no security, very low interest rate of RPI +3% (so currently 6%), 12 month capital repayment holiday available), meaning that the entrepreneur is not going to be saddled with expensive debt for a long time and does not need to give up an equity stake at such an early stage in the business. They can apply for as much as they think they need and propose a repayment term of anything between 1 and 5 years. ARE YOU…? • Aged between 18 & 30? • Living in England? • Wondering what it would be like to run your own business? • Not sure about working for someone else? • Wanting to take control of your future? • Keen to have someone help you create a business? • Ready for the real world of business? If yes, then a Start-Up Loan is for you. Benefits: 

  • Regus – six months free use of Virtual Office giving you:
    • A business address in a recognised and prestigious business location;
    • Mail handling, call answering and administrative support;
    • A Businessworld gold card giving you access to a network of business lounges in over 1,300 business centres worldwide, including over 160 in the UK; and
    • Discounts on all other Regus products and services.
  • eBay – a free online store for 3 months.
  • PayPal – a discounted rate of 1.4% + 20p per transaction for 6 months (usually 3.4%).
  • Magento – a free website for six months with e-commerce capabilities.
  • Intuit – 24 months free access to QuickBooks Online Simple Start, their cloud-based accounting software.

Find out more here – http://entrepreneurcountry.com

Bootstrapping –

Sometimes if you have a product or service to sell you can get yourself going with some initial sales. They may be small and it may be tough but lets face it, you don’t have a loan to answer to and it really shows the market exists if people are willing to pay for your product or service.

Self-funding –

You might have your own funds already, if not perhaps you could work part time or full time somewhere to save some money.

 

 

Good Luck in your ventures! Feel free to pop by our forum or join us on Facebook/Twitter!

 

Written by OIiver

Oliver is a 20 year old web-enthusiast and entrepreneur from the UK. He enjoys Marketing, SEO, Technology and Business.

  • Stephen

    Fantastic research, great resource indeed.
    Some good investment sources in there. :)
    It will be good to add to this list as you go.
    Stephen

  • http://brenthardinge.net Noemi Sable

    My Husband and I have a great opportunity to buy a very successful bussiness for much less than the cost. We have tried to get funding from banks but have been unable to do so. We don’t have a house to use as collateral. Is there any possible way we can get funding for this business? We need to buy it quickly.
    This is only quick because we have been trying for so long to get funding.

  • http://enigmaboard.com lucasbytegenius

    Looks like the only good funding option for US-citizens in this article is Kickstarter. You need to have a really good business idea though for that to work.