What are my options for start-up investment?
If you’re looking to start up your own business it’s an incredibly exciting time, but there are a number of financial aspects to consider before you can get it fully up and running. Unless you have the capital yourself, you may be wondering what other options there are available for investment for your new business. Well, you’ll be pleased to know there are several options, which can get you on your way to a successful business.
In the UK, there’s big emphasis on new start-ups and a number of Government-backed support schemes can give you some initial funding to test and develop your new business idea. Depending on the sector you are intending to get into there are grants, finance and loans and funding schemes for small and medium sized businesses.
Another option is to take out a bank loan. However, you should bear in mind that you’ll be expected to prove that your business idea already is or will be a success, giving them realistic cash flow forecasts and proof that you will be able to pay back the borrowed amount with interest. Be sure to calculate the risks of borrowing from the bank, and factor that you may be required to secure your loan against your car or house, if you’re unable to repay.
A good way to get added investment into a new start up is by selling shares into your company. This could be by getting your friends and family to invest or through other ‘equity funding’ options. These include business angels, venture capitalists and crowdfunding schemes. Business angels are wealthy individuals who invest in start-up businesses, whilst venture capitalists are companies who invest large sums into fast growing new start-ups, and finally crowdfunding consist of large groups of people who all invest, usually via the internet. The downside to this type of investment is that your shareholders will jointly own your company and have a say in how its run and be entitled to the profits.
Whichever method of investment you decide for your new start-up, it’s always a good idea to seek professional legal and accounting advice to ensure that you make a sound investment decision that will suit your company now and for the future.
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About Alom Rouf
Alom is an Incorporated Financial Accountant and a Qualified Practising Member of the Institute of Financial Accountants. He has been in the accountancy industry since 2002. Throughout the years, he has gained a vast amount of experience in evaluating sole trader and partnership clients to assess whether they would be better off incorporating.