Finding the right funding for your start up during the coronavirus pandemic can be a daunting task. Many established businesses are struggling to continue operating, and the picture has never been more challenging for those just starting out.
On the flip side, small business loans and investments were up significantly in 2020 compared to 2019, showing that there is still significant interest in funding start ups, even during the pandemic.
There are many ways that you can look to get finance for your start up. The demand is still there in many sectors, so part of the key to a successful start up in this climate is ensuring that you choose your product or service wisely.
Here are some of the best ways to ensure that you get the funding you need to start or continue growing your business during the pandemic.
Decide on Your Business Goals
To have a successful business, you will need to have clear and achievable goals. These goals will likely be different from the aims you may have had before the pandemic. Our habits and lifestyles have changed dramatically, thanks to the pandemic, and to secure the funding you will need, you will need to show that your business taps into the new ways of the world.
Think carefully about how you can adapt your business plans and goals to the new demands on the market. The pandemic has created a number of new niches, from at-home beauty treatments to luxury meal kits. Ensure that whatever you decide, there is a clear and present demand that is not already being well served by competitors.
Governmental Start Up Loans
These loans are government-backed and with sums of up to £25,000 available for anyone looking to start or grow their small business. Interest is relatively low on these loans at 6%, with the payback schedule between one and five years. This option provides a lot of flexibility for business owners, though you will need to ensure that you submit a thorough and detailed business plan.
The other advantage of this type of loan is that you will be paired with a business mentor once accepted. This mentor could be invaluable in helping you make the most out of your funding and find success.
Consider Enlisting the Help of a Broker
Brokers can be an excellent choice for anyone unsure of where to start when it comes to business loans. They can provide advice and quotes to help you see how much funding you could receive and where to look for it.
Check out this post on start up loans from Capalona for more information. Excellent quality brokers like Capalona could be an essential step to securing funding for your start up business. They have the business and market knowledge to review the many options out there and find the best funding source to suit your business.
Crowdfunding can be a great way to secure smaller levels of funding for your start up. This method of funding is particularly helpful if you already have a small but loyal customer base. You could consider utilising crowdfunding to make any changes you need in your business due to the coronavirus pandemic.
Crowdfunding can also be a great way to get a gauge of the market and see if the demand for your product is there. It can also help you get an idea of how marketing and word of mouth can help you secure business success.
You may wish to consider self-funding your business if you are wary of taking out a loan. While this may delay the launch of your business, it can be an excellent way to start a business without worrying about taking on debt immediately.
Consider staying on in your current job for an additional year or two, and save every penny you can. You may still need to take out a loan at the end of this, but it will be significantly smaller. Delaying the launch of your start up for a short period of time could also help ensure that you are making the best business decision in the long term.
Small Business Grants
Small business grants are an excellent option for many small businesses. There are various types of grants available, so it is worth researching the kind that would most benefit your start up. Check out the government’s business finance support page for a list of the grants available to businesses and the requirements you will need to meet to receive them.
Angel investors are high net worth individuals who want to use their money and business expertise to invest in new and upcoming start-ups. They usually use their own individual money to invest in an entrepreneur, making them different to venture capitalists in this regard.
The most common place to find an angel investor is with a friend or family member, though there are also networks dedicated to matching investors with new entrepreneurs.
It is worth noting that angel investors often exchange their investment for a stake in your company, so you should be sure that this is something you are comfortable with if you choose this funding type.
Venture capitalists are groups of investors who pool their funds to invest in different businesses. This type of funding is harder to secure compared to angel investors, as venture capitalists tend to focus their investment on fast-growing companies.
If your business is really taking off and needs a cash injection, then venture capital could be the way to go. You should have backup funding ideas in mind if you are unable to secure venture capital. It is also worth noting that many venture capitalists will want to become partners in your business should they choose to invest, so you will need to be sure you are happy to do this.
Make Sure Your Business Shines
If you are hoping to attract the attention of investors, then showing your business in the best light is crucial. You should ensure that your business has an excellent quality website and that your business plan is top-notch. Gaining investment funding is more competitive than ever, thanks to the pandemic, so you will have to ensure that all areas of your business stand out.
Cutting Business Costs
Cutting business costs can be an excellent way to help tide your business over while you secure new funding. Consider having a review of your business practices and see where your business could cut costs. While this can be frustrating for any new business founder, the ultimate goal is to keep your business running so that you can make a comeback with new funding.
One great example of cutting business costs is by implementing automation. If your business has a lot of repetitive tasks, you could consider automating these instead. This will free up your or your employees’ valuable time to focus on more high-value tasks instead.
Look for Tax Rebates
Depending on your business, you may be entitled to tax rebates. These are granted to companies that focus on innovation in technology as well as a number of other specific circumstances. You will have to prove that your business has done significant research and development in your field to qualify for one of these rebates, but they can be an excellent way to free up cash for your business.
Consider Launching a Tech Start Up
Tech is one of the hottest areas for investment and funding at the moment, thanks in part to the pandemic. As our lives have been increasingly led online due to lockdowns and stay at home orders, the need for technology to adapt and shift with our demands in increasing.
Tech is one of the sectors that is only likely to continue to grow and thrive over the coming months and years. If you have the know-how, then starting a tech business could be the perfect way to capitalise on this growing demand.
You could also consider partnering up with someone who is more technologically minded. If your expertise lies in business management, then partnering with someone who can bring innovation to the tech world could be the perfect combination to secure success and funding.
There are many options out there for business leaders to consider when looking for funding during these challenging times. It is vital that you do your research into the types of financing available and the requirements and risks of each.
No matter what form of funding you choose, there is usually some element of risk. Loans to be paid back, investors to satisfy and deciding to join a partnership are some of the key considerations. While it may be tempting to want to keep yourself debt-free or keep sole control of your business, risk and change are a necessary part of doing business.
Ultimately, you will be best placed to know what is best for your business, so ensure you give it careful thought and weigh the pros and cons of each option.