This is a country that has close to 28 million small businesses and where figures from Challenger, Gray, and Christmas at the end of 2016 showed that 7.4% of job seekers decided to start out with their own company.
Yet, perhaps the biggest challenge to any new business is that of getting hold of funding. Even the best ideas will come to nothing without money to get them off the ground. So, how can you get the cash that you need to get your ideas up and running?
Ask for a Bank Loan
Until recently, this was far and away the most popular way of getting the funds to start up any new business. However, there are a few drawbacks to this approach to bear in mind. For a start, it can be a time-consuming process with a lot of paperwork to be completed along the way.
You are also reliant on the current financial climate. For instance, at the time of writing many banks have cut back on small business lending. This means that it can be very frustrating to try and find a borrower that is willing to take a chance on your venture.
On the positive side, it can be a good idea to build up a strong relationship with your bank in this way. If they fund you right from the start then there is the chance that they continue to support and help you in the future too.
Borrow from Friends or Family
Another popular option is to borrow the money needed from friends or family. This is typically done when it isn’t possible to borrow from a traditional lender such as a bank. As well as being a more relaxed arrangement, this will typically also be cheaper and there will be less pressure to pay it back on time.
Having said that, borrowing from friends or relatives can turn out to be a bad idea. If you struggle to repay the money for any reason then this can put a huge strain on the relationship. This is especially true if they have taken any financial risks to give you the cash.
Making a success of your new business in this way can be extremely rewarding for everyone involved. Yet, the risk of it all going wrong is just too great for some people to feel comfortable doing this. Naturally, if they borrow the money form a credit card or against their home then paying it back on time becomes even more important.
Use Online Funding Services
In recent years, there has been a genuine revolution in the world of small business funding. This has come about thanks to modern technology opening up new possibilities for both businesses and lenders.
The likes of crowdfunding and peer to peer lending sites have exploded in popularity in recent years. We can see at Fundbox how business funding works in the digital age, as they compare traditional borrowing methods to the modern approaches that are currently available on the internet.
Using these online funding services is something that is expected to carry on growing in popularity. This is because many entrepreneurs have come to the conclusion that they offer a more flexible and appropriate way of borrowing money in the modern business world.
Try Bootstrapping
What if you decide that you want to start your business without any sort of external funding? Perhaps you don’t want to risk getting into debt or maybe you like the idea of the challenge of building up a company with no outside help.
Bootstrapping is the term used when you start a business with little or no funds. This typically means getting creative and using whatever resources you have to hand, no matter how meager or inappropriate they might appear to be at first.
This is an adventurous way of working, as you look to make the business grow using the revenue that you make from it in the early days. It isn’t right for everyone but it does allow you to maintain total control and do things your way without owing any money to anyone. According to Investopedia, it can put extra financial risk on the shoulders of the entrepreneur, though.
Which One Is Best for You?
So far, we have looked at a number of different ways of funding a new business. At some point, you will need to make a decision and choose of them. This might not be easy, as each one of them has some advantages and disadvantages into account.
It will eventually come down to which option fits in with your overall budget, personal taste, and approach to business. By putting some time into thinking about this issue you can hopefully find the perfect way of getting the funds that you need to make your business dreams come true.
