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A Guide To Funding Your Startup


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Setting up a business can require a lot of funding. Here’s a guide to creating a financial plan for your startup, as well as several methods of raising funds that you could consider.

Create a financial plan

You can’t set up a business without a financial plan. Without one, you could be tempted to spend money frivolously and get yourself into a lot of debt. You should research the costs of everything you need to get your startup off the ground. This could include buying equipment, licensing, insurance, premises costs, recruitment costs and initial marketing. Once you’ve calculated all these costs up, you should have a budget. This will tell you exactly how much funds you need to raise.

Save up your own funds

It’s possible to fund a business out of your own earnings. You won’t have to pay interest on these funds or pay out future shares, unlike other forms of funding. Some people are lucky enough to inherit money that they put into setting up a business. If you haven’t got this money behind you, you could consider slowly saving it up. This is likely to be a gradual process with some people don’t have the patience or willpower for. Putting your money into a savings account that collects interest could help you to raise your funds more quickly.

Take out a business loan

Borrowing money is the most common way of funding a business. This could be via a business loan or using a business credit card. You’ll want to shop around for the best interest rates. Bank loans may have the least interest, but may require you to have a high credit score, plus they may take several months to process. You can borrow money more quickly with a poor credit score, but expect the interest rates to be higher. There are various comparison guides that can help you borrow more strategically – this Nav review gives information on one such programme. You may even want to use a loan broker to shop around for the best borrowing method.

Seek out investors

Another way to raise funds is to seek out an investor. This could be an individual or a company who is willing to give you the funds in return for a share in your profits. Convincing people to invest in you isn’t easy and may require having a solid financial plan as well as prediction of the profits you hope to make. It’s also possible to raise money through crowdfunding, which involves getting money from multiple investors, sometimes without having to offer a share in your profits. Sites like Kickstarter are ideal for this purpose.

Don’t blow your budget

It’s important to only raise and spend what you need. If you have to take out more loans or seek further investment, you could be chipping away further at your future profits. Be careful of using credit cards or lines of credit as they could encourage you to borrow more than you need.

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