In my previous article, we have looked at the approaches getting to grips with Planning of your Business from Point 0.
We are now going to move onto even more fun phase! You just love the thought of it, don’t you? Just think for a second….what really concerns all business people? What affects all businesses? Be it established enterprise, developing company or an early-day startup. Well….many things. But one which is the most important is – MONEY. Those polymer notes and shiny coins can potentially be your saviours and your punishers at the same time. The more of those forms of currency you have the better. It helps with the growth, the operational management upkeep, marketing investment and settling of arising issues. If monies total value is negative – you are in big trouble. However do always remember that there is always an option available for you to solve your troubles.
There are multiple funding streams there, numerous ways to acquire finances and tap into right pots and each would be tailored to your situation. So you would as why are there so many? Simples!
Hundreds of thousands of businesses are operating in thousands of fields providing tens of thousands services and products in a million different ways.
For each one, an established economy has to offer an opportunity for external support, growth and development. So let’s look at the possible streams available and take a closer and more detailed look at each one individually as to keep the post concise and fun to read I have decided to break the funding topic into sequential publications. That way I can not only help you understand and pick the one that suits you best but also will be able to cover the nitty-gritty of details with Pros & Cons of each.
I will do my best to publish 2 parts per week and will start with this Friday (21st September 2018) followed by another 2 next week and so on…
I will attempt to give you the overall understanding of what each source of funding entails and the ways of applying for it. (I am based in the United Kingdom, hence my advice on the application for funding will be tailored to the rules of my government and Her Majesty Revenue and Customs department. However, a lot of European States share practices and Worlds of Commerce echo one another throughout the Globe in common views, core requirements and similar approaches.) I will also try to outline the positives and negatives of each funding sources and then it will be up to you to decide on which one you want to apply for in your case.
The list of most accessible and commonly used funding sources as follows:
- Personal Investment – aka Bootstrapping + Friends & Family (part 1)
- Commercial Loans (part 2)
- Commercial Mortgages (part 2)
- Equity Financing (part 3)
- Government Schemes + Grants (part 3)
- Credit Cards (part 4)
- Donations (part 4)
- Crowdfunding (part 5)
- Investors (part 5)
- Partnerships (part 6)
- Bartering (part 6)
- Venture Capital (part 7)
The list above is the mainstream sources of how you can fund your idea. There are many more exists – more specialised and industry-based. Trust my word, if none of the above suits you – then you already have an access to a micro-funding source of your sector.
Bear in mind that getting money is one thing but making sure that whatever source of funding you will choose – will not become a daunting liability is another.
Sugar-coated pill can become poisonous if you don’t follow in-take instruction.
Same here, you must ensure that your idea is viable, autonomous, alive and can re-pay any form of debt-funding and your service-delivery model allows you to stay afloat without constant reliance on new sources or cash-injections. There are different forms of legal set up exists (charities, LTD, CIC, LLP, Partnerships, Trusts, etc…) and they all have their own funding model suitable to them. Make sure that the commercial mortgage you are intending to take to retain the assets (land/property) for future development is sustainable, ensure that the 3-year-phase government loan has all the necessary details and tomorrow’s change of ruling party at the general election in your country will not kill your venture off as it will run out of ‘juice’ due to the legislation change, or that the bank loan is on a viable APR so your overheads won’t bankrupt you due to the rise in flat-rate.
- Funding can be ultra-attractive, especially when you are desperate to start trading. But be mindful to plan your budget ahead and allow for any discrepancy costs and unforeseen expense. Create that buffer zone, a ‘pillow’ you fall on to soften the damage.
e.g.: Buying £100 worth of apples at £1 each and projecting to retail all at £1.50 might not make you an expected profit of £50 as 20% of your apples might rot and never get sold, becoming a loss to your buying.
In other words: accounting for a re-payment rate on an unrealistic budget just to qualify for funding might land you in a ‘doo-doo’ and doomsday will be upon you.
Anything too good to be true will be rejected by a reputable source of funding if you are presenting ‘out of blue’ figures
On the other hand: if there is an offer of something on super-favourable terms at a limited set-up cost and no thorough evaluation process – RUN! Someone is trying to ‘pull your leg’ and eventually it will get torn off.
Be realistic – do your research – stay on alert for signs – be sceptical and not naive.
Prevention is better than cure.
FUNDING, Part 1 is on its way!