17 Apr 7 Ways to Fund a Start-up Marketing Business
Starting a marketing business is a fantastic venture, and you have many exciting times ahead, but you’re also going to face some significant challenges and bumps in the road. One of the first issues you’re to come across is finding the money you need to get up and running for buying office equipment or marketing your services. Ideally, you’d have access to a big pot of savings which has been standing by for just such a project, but it’s more likely that you’ll need to find an external source of funding. There are several options open to you, but not all will be suitable, so it’s crucial that you do your research before making any financial commitments. To help you get started, here are some of the most common ways to fund a start-up marketing business.
- Ask Family and Friends
Many people turn to friends or family in the early days of a business venture to help them kickstart it. For example, if you want to trial your business and be able to prove to a future lender (like a bank) that your business can be profitable, this kind of funding works well. However, it’s crucial that you make your family or friends aware of any risks involved in investing that you set out formal repayment terms and, to make it worthwhile, you may want to offer interest on your repayments.
- Get a Loan
A loan can be a great way to kickstart a business venture, if you make the right choice for your business and can definitely afford the repayments, including the interest. The best interest rates are reserved for people with the best credit scores. There are a few types of loans to consider:
- Business loans from banks are the most obvious choice. They are popular because you retain control over your business and can put the money to whatever you deem most appropriate. However, the process of getting a business loan from a bank can be long and complicated.
- Personal loans may provide a more straightforward solution as they are usually easier to apply for with no need for business plans or collateral. You’ll need to check that your lender doesn’t have any restrictions on using a personal loan for business expenses. If you have a good credit score, your personal loan may offer better rates than your business’ application would receive but keep in mind that you will be risking your credit score. Visit Crediful more advice on the best personal loans for people with good credit.
- Consider Crowdfunding
More and more start-ups are turning to crowdfunding, which is primarily gathering lots of small contributions via the internet from the general public. This strategy can take a while as you’ll need to reach a lot of people and convince them that your business is worth their money. They can either lend you the money for a period of time or can invest in the business in return for an equity stake. Marketing is often key to a project like this, but it depends on your skill set, so if you think you can handle it, you may find it a profitable tactic.
- Find Your ‘Angel Investor’
The next level up from crowdfunding is an angel investor. These investors are individuals with a good amount of personal wealth who like to invest in start-up businesses for a stake in the business. They often have some business expertise in addition to their investment which can be invaluable in the early days of a business venture. A possible drawback to consider, however, is that you’re likely to lose control over some of your business.
- Find a Venture Capitalist
A venture capitalist is another type of investor but will usually give a much larger amount of money in exchange for equity. This type of investment can fast-track a business’ growth as the investor is looking for a return on their investment as quickly as possible and they often have a network of beneficial contacts. Again, you’ll be giving up at least some of your business to the investor, so consider this carefully before you commit.
- Research and Development Grants
Depending on the nature of your business you may be entitled to a grant from the government. The government offers grants (money that doesn’t need to be paid back or tax relief) to businesses which meet certain criteria.
- Short-term Loans
This funding stream is the last on the list as it can be a very risky tactic. You can find easily accessible loans which are called short-term or ‘payday loans.’ They can be an effective way to plug a temporary funding gap or to get a project up and running, but they incur high rates of interest. Only consider these loans if you’re sure you can pay the money back in time.