Are you thinking of starting your own business? The greatest challenge (apart from coming up with a great idea) is how are you going to fund it for the first couple of weeks or months before sales kick in. Whatever else you need to work out how you’ll secure funding. From bank loans to angel investors, you have a lot of options to choose from — but not all are favourable.
1. Self-Financing
Whatever your start-up is it is critical that it is adequately funded to allow for the inevitable hick up or delay when starting a new business. Typically, an entrepreneur will fund as much of the start-up through their own savings, loans from family and friends, investments from others, loans, bank overdrafts or less advisably through credit card borrowing (an expensive and risky option). Unless early sales are achieved with immediate payment the start-up could find themselves running out of money and coming under unnecessary strain and pressure or even early failure.
2. Enterprise Board
A visit to your Local Enterprise Board or Enterprise Ireland is a must do to check out what grants and funding is available to support a new start up. They are there to help you succeed, offer guidance and to steer you in the right direction.
3. Banks
Banks are notorious for rejecting small business loans, especially for new companies. The ones they do lend to are paying much higher costs for their loans than their counterparts across the Eurozone, despite ECB rates being at rock-bottom levels for some time.
4. Angel investors
Did you know that Google and Yahoo got their start with funding by angel investors? An angel investor is constantly on the lookout for the next big idea. If your company is chosen by an angel investor, know that you’ll be expected to give some share of equity in your business. Some tips about angel investors here.
5. Crowdfunding and P2P Finance
Crowdfunding is getting more and more popular particularly in the tech space but it has extended out to nearly all sectors. Crowdfunding and P2P Funding is the financing of a new project by raising many small amounts of money from a large number of people, there are a growing number of funding options available to investigate for the Irish market. A recent study in the UK estimates that the UK Alternative Finance sector is worth £3.2 billion, up 84% on 2014.
6. Factoring
If none of these options is for you, consider invoice discounting. It is a much easier option for the start-up and existing business with a quick decision where you can discount just one transaction allowing you to release funds to order additional stock or your entire sales ledger.
So are you ready to start your own business?
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At Celtic Invoice Discounting, we assist start-ups and existing companies with their funding and cashflow. Feel free to call us on 01-230 0866 for a confidential conversation.
