Are you looking to grow your startup this year but are conscious of the difficulties that financing a new business brings? After all, 29% of startups that fail do so due to running out of cash. Fortunately, from other businesses’ experiences you can learn the best way to build your own.
Our guide is here to point you in the right direction of ways to secure the funds you need to begin your startup journey in 2023. Better yet, we can give you a few ways to maximise the resources you have and save money along the way.
Borrow from friends or family
A less formal way to secure funding for your startup is to borrow money from friends or family. As you start out with your new exciting idea, you might have a supportive group of people around who want to see your business thrive.
You might not want to mix business with your personal relationships, but this could be a good alternative to a bank loan as they are often more flexible repayment terms and unlikely to involve interest.
To avoid any awkwardness or difficulty down the line, make sure everyone is on the same page when it comes to repayments and the risks involved. Have the terms of the loan written down, detailing the expectations
Keeping up with your day job
As you launch your new startup you might find yourself wanting to give up your current form of employment to focus your full effort on the business – but a way of not falling into debt in the beginning of your startup journey is by keeping your current employment.
It will certainly be a challenge to balance your time and you might find yourself compromising on certain elements, but in having that stable source of income you will have less financial strain in the early stages.
Small business loan
If you are looking for a cash advance or cash injection into your business, you could consider applying for a small business loan.
Approval for this is not always guaranteed – since you may need a minimum of 6 or 12 months of trading to be eligible or be showing a certain amount of revenue or profit per year.
Fortunately there are a number of lenders and bank initiatives to support those who are looking to grow their startup.
If you are fortunate to have a loan granted, make sure you are confident in your repayment terms of the loan to avoid falling into debt and facing a strain on your finances. A benefit of this process is that it will encourage you to have a strong business plan in place.
Crowdfunding
Crowdfunding is the process of gaining small amounts of money from multiple individuals to fund your business. A number of platforms have developed in recent years to offer a simple way to attract the support of those looking to invest in new ideas.
Having a strong social media strategy for crowdfunding is key in order to reach a wide network of potential investors. It is advantageous as a way of building the capital you need whilst growing your product’s audience. Another benefit is you are able to acquire the finance you need without giving away control of your business.
It is common to offer an incentive for investors in your business, such as early copies of the product.
Finally, maximise your resources
Be sensible with the capital you have acquired. Some of our top tips in the early stages of starting your new business are to make use of free softwares, explore the option of remote work to remove the cost of office space and make conscious hiring decisions including intern workers who are eager to get experience, at a low cost.
By making smart choices in the early stages to prevent wasted funds you will reduce the likelihood of your business failing and falling into debt.
Leave a Comment