So, you’ve come up with a great business idea but aren’t sure where to take it from here? Keep reading to explore different funding options available to entrepreneurs and to hopefully find the inspiration to take the leap forward.
Set up a crowdfunding page
Crowdfunding is a go-to funding avenue for many aspiring entrepreneurs. The idea behind it is simple: You set up a page on a crowdfunding site, detail your project or business idea, explain what makes it stand out from similar ventures, and encourage people to support it. Backers can then pledge various amounts of money to help it come to life.
To encourage contributions, most crowdfunding campaigns also offer rewards for. For example, depending on how much money has been invested, a reward could be something as simple as a thank-you note or, for higher pledges, sending backers a prototype of your product.
Some of the most popular sites in the English-speaking area include gofundme.com, kickstarter.com, Indiegogo.com, and crowdfunder.co.uk, although other countries may also have their own versions.
In line with crowdfunding sites’ increasing popularity, however, the battle for page views and money has become more competitive. While it does seem like a simple and straightforward way to secure funding, especially considering that some of the most successful campaigns have received millions of pounds in backing, it still involves a fair bit of work to make sure you reach your desired goal.
Some important aspects to keep in mind are making sure you opt for a realistic funding target, and to invest time in marketing and sharing your campaign as widely as possible. You really want to get the word out about your idea and get supporters on board, even before you actually launch your campaign. If nobody knows about your project, it might get lost among the variety of campaigns on the different crowdfunding sites, making it hard to attract enough backers. Social media is an excellent tool to spread the word, and promote your idea. Take a look at these 15 tips on growing your social media following for some inspiration.
Apply for a grant
Grants aren’t just for non-profit organisations. There are several grants for small businesses and startups available that could apply to your business idea. It just comes down to doing some research in order to find one that fits.
One easy way to get started is to take a look at the UK government’s business support finder, which gives you an overview of different grant schemes that are available. Using the dropdown menu on the side, you can select whether your business is in a “pre-start”, “start-up” or “grow and sustain” phase, how many employees you have, and what sector you’re aiming for or are already operating in.
Another option is to go through EU Startup services, part of the EU’s Horizon 2020 programme, which offers a total of €2.8 billion in grant funding for startups, entrepreneurs and SMEs that are pursuing “breakthrough” innovations, thus helping them turn their idea into a product. There are two phases of funding – the first one provides €50,000 in funding whereas money for the second phase lies between €500,000 and €2.5 million.
Secure a loan
The major drawback to a loan compared to crowdfunding or grants is, of course, the fact that at some point you’re going to have to pay that money back with interest. Still, if other options haven’t worked out and you’re convinced you’ll be able to repay the loan it might well be worth to take the leap.
While you could approach your bank or even family or friends for a loan, the UK has a government-backed loan scheme in place, called Start Up Loan, which has been designed with entrepreneurs just like you in mind. So far, the scheme has supported 40,000 business ideas with more than £250 million worth of loans. Check out the “Success Stories” section on the website, which features interviews with past recipients on what inspired them, how big of a loan they received, and how they put it to use.
You can receive between £500 and £25,000 with a fixed interest rate of six percent per year. As for repayments, they are scheduled on a monthly basis with a loan repayment term between one and five years. According to the website, the two core factors taken into consideration when it comes to awarding loans are your personal affordability as well as the viability of your business plan. To round off the offer, Start Up Loan recipients also receive free guidance and mentoring for a period of 12 months.
Like all steps of the journey to becoming a successful entrepreneur, funding your idea will take lots of work and determination, and may include a few setbacks. But you’ve already made it this far, which means there’s a good chance you’ll also master this hurdle.