One of the biggest obstacles to starting up in business can be lack of capital. After all, you are in business to make money, so it can be a reasonable assumption that it is not a thing you have in abundance to begin with!
Obviously different types of business will have vastly different demands when it comes to starting capital. A creative person looking to write poems or paint landscapes may be able to get going with little more than a notebook and biro, or a few brushes and a set of watercolours, assuming that is that they have the means to sustain themselves whilst pursuing their new vocation. At the same time somebody who wishes to open a factory and employ staff would need a lot of money to cover costs incurred before the undertaking is in a position to turn a profit. So what are the options?
- Your Own Resources
It goes without saying that if you are able to finance your own project then that is a better and cheaper option than borrowing. Somebody who has recently retired with a pension or even a golden handshake of some kind may find themselves in this position. If you have funds and you are confident that your business idea has potential, use them before looking for outside help.
- Grant Funding
Certain types of enterprise may be eligible for possible grant funding, such as start-up projects by young people or disadvantaged groups, or businesses which could provide some kind of social benefit to the wider community. Your local authority or Chamber of Commerce might be in a position to point you in the right direction if you think there is a possibility that your project might qualify for outside funding without financial strings attached. Almost invariably there will be some criteria involved which your business idea will have to satisfy in order for a grant application to be successful.
- Apply for a Loan
Banks and other lenders might be willing to help out if they think your business is viable. They will ask to see a business plan and an advisor with knowledge and experience in the field will want to interview you to ensure that you know what you are doing. Be careful to avoid high-interest lenders – it will be so much harder for your venture to succeed if you are struggling to meet unreasonable loan repayments before it even has a chance to get off the ground.
If you can arouse general interest amongst a wider community of people, including potential customers or even partners, then crowdfunding your initiative might be a viable way of proceeding. Usually you will need to offer some kind of stake in your business in return, possibly a free product or a return on any investment made. Crowdfunding is a relatively recent phenomenon and in exceptional cases entrepreneurs have been known to raise hundreds of thousands of pounds in this way as a result of the interactivity made possible by internet technology.