Starting a new business is an exciting but challenging opportunity. While you’re in the early stages of setting up, it’s worthwhile finding out what support is available to new businesses and how you can take advantage of it.
The obvious place to start when you’re looking for financial support to get your business off the ground is a business loan. You’ll need a comprehensive business plan as well as financial projections for up to five years. A business loan is potentially riskier because if the business fails you have a substantial amount of money to repay the bank, but it does mean you retain complete control of your business.
It’s very common for startup businesses to seek out investors who can give you funding. Venture capital investments are normally offered in exchange for a stake in the business – you give part of your company to the investor who will receive a share of the profits when you make them. Investors are likely to want an active role in the company, as a minimum they’ll want a seat on your board of directors. However, they can often offer expertise and insights that will help your business get established and grow, so it is worthwhile.
To get started looking for an investor, research individual investors in your industry (sometimes called angel investors) and venture capital firms. Before you make any moves, check that they’re reputable and they have relevant experience of working with new businesses. Once you’ve narrowed down your investor you’ll have to share your business plans, and they’ll conduct a due diligence review before you set out terms of the investment and agree to it.
Finding investors can be pretty hard work, and you’ll need to have a flawless pitch and a viable business plan. An alternative way of getting some money invested in your business is crowdfunding. Sites such as kickstarter.com or indiegogo.com are a platform for people to present their business idea and ask the people in their target market to contribute any amount of money to make the idea become reality.
Crowdfunding can be done on an investment basis where contributors receive a small stake in the business, or as a loan that’s to be repaid. It can also be completely donation-based with nothing promised in return. Or you can offer rewards for example some crowdfunded businesses will offer a discount off your products or services or some sort of branded merchandise. For example, thetileapp.com raised $200,000 within 24 hours of launching its crowdfunding campaign for its blue-tooth device that helps people locate lost items.
Accelerator and incubator programs
Accelerator and Incubator programs are specifically designed to support, grow, and establish startup businesses. These programs will often offer a small investment, and the founders get to work with a group of highly experienced mentors who will help establish the business. As well as advice on getting started, it often puts new businesses in a lot better position to find investors later on.
It might be that you need more than money and mentors to get your business up and running. While you may have dreamed of running your business alone, bringing in a partner doesn’t just have to help you financially. You’ll also be sharing some of the risks with them, so it doesn’t all come down to you. Plus you can find a partner with specific expertise or skills that can help out in the areas that you don’t have as much experience.
Partnering with others that have relevant skills and passion for your business idea or industry will also make it far more credible. Investors will feel more confident putting their money into a team of people that can make the business a success, rather just one person and their idea. For example, vaclaimpros.com is a service for veterans that is run by a group of veterans. The VA Claims Pro team can really relate to their target customers and understand their issues, making it easier to attract veterans to use their service.
The best place to start looking for a business partner is in your existing network; look at your LinkedIn connections, people you’ve worked within the past, or attend industry events. There are also sites like starthawk.io, which are specifically designed for finding co-founders.
Starting a new business can be a stressful time; it’s often a big risk and there are a lot of issues and common mistakes to navigate. It’s essential that you take the time to fully understand all of the support that’s available to you as a new business and choose the best option for you.