How To Raise Money for Your New Business Venture

Tue, Mar 21, 2017

Financial Advice, Investment

In many ways, the evolution that has gripped the personal loan market has also driven change in the commercial borrowing sector.

So, just as there are some more affordable short-term loan options available to individuals in the modern age, entrepreneurs also have access to a wider range of choice when looking to fund their business start-ups.

Identifying these options and determining which one is right for you is crucial, so here are three of the most creative options available in the modern age: –

  • Equity Crowdfunding

Let’s start with equity crowdfunding, which has become increasingly popular and credible over the course of the last year. While crowdfunding has existed for more than a decade, of course, its traditional model offered restricted rewards to investors and made it challenging for businesses to secure significant funding.

With equity crowdfunding, however, entrepreneurs can continue to draw funding from an array of sources in exchange for shares within the company.

This funding methods combines both accessibility and competitiveness in equal measure, while investors can also look forward to more tangible rewards over time. The key, of course, is to ensure that you present your proposition in a concise and professional manner, while also capping the amount of company equity that you are willing to give away.

 

  • Affiliate Sales

In some instances, you may have a viable product that is ready to sell, but simply lack the infrastructure to effectively market and shift goods in high volume. Rather than borrowing huge amounts to develop your business model, however, it is far better to drive organic growth by initially looking to sell products through affiliate partners.

In simple terms, brands can enter into agreements with third party affiliates such as Amazon, who already have the platform to market products to a mass audience. In exchange for a fixed commission percentage per sale, you can then sell your stock freely to a global pool consumers, instantly extending your reach without spending outside of your means.

This will help you to scale your venture naturally, while minimising your overheads in the process. You will have to factor in a slight decline in your profit margin, of course, but a little creative pricing will help you to negate this over time.

 

  • Self-fund Your Venture With Personal Funds

If you are determined to launch your business without incurring commercial debt (or compromise on the profit margins associated with your products) you may want to consider funding it yourself. This requires the accumulation of personal wealth, which can then be invested into the business as though it has been sourced from an independent, angel investor.

This is arguably easier than ever in the modern age, with real-time, online portals offering access to financial markets and a host of flexible asset classes. These channels enable you to invest your disposable income and incrementally build wealth, and would effectively replace typical saving vehicles.

You can also access the personal loan options that discussed briefly earlier, with examples such as auto-title loans enabling you to leverage your car as equity and raise funds. This transfers the debt liability from your business to you as an individual, and should not pose a problem as long as you have the personal income to make the necessary repayments.

One Response to “How To Raise Money for Your New Business Venture”

  1. Glenn Blackman Says:

    I would suggest that invoice finance is another useful method of funding a new startup. As you raise sales invoices you can draw down c. 85% of their value immediately, without having to wait for them to be paid. Some invoice finance companies specialise in helping new startup businesses. As your sales ledger grows so too does the amount of funding that you are able to draw. In this way, the finance keeps pace with the growth of your business.

    Reply

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