New businesses do not appear in a vacuum. They are generated from a solid idea, a strong business plan, and, more often than not, a serious amount of seed funding. While it is absolutely possible to build a business from the ground up, the present economic situation is not a favourable one for new start-ups. Funding is a fast track to scalability, and vital consideration for any new business. But how might a business approach financing itself in 2023?
One of the best ways for new businesses to get off the ground in today’s business environment is to seek out start-up grants. There are myriad ways in which an entrepreneur can access money for a new endeavour – and not only that, but money with little expectation for return attached to it.
Grants and funding paths are particularly recognisable to those in creative industries, where organisations like the Arts Council frequently offer support grants to businesses and projects in the sector. Meanwhile, localised schemes like Leeds’ Launchpad partner with larger music organisations to provide funding for new professionals in the industry. Grants for start-ups in other areas like tech can be harder to come by, unless there is a key USP or development element with wider community or industry impacts.
As an entrepreneur with ambitions in the private sector, the next-most common option for financing a new business is a straight-up, bog-standard loan from a major financial institution like a bank. Start-up loans come in a variety of forms, each with their own benefits and disadvantages.
One of the more popular forms of business loan might be an unsecured one, which sees money accessible to those without capital or assets to back the loan. These, though, come with high rates of interest, which could eat into early profits.
Whenever considering borrowing money to finance a business, particularly if your business framework is already there, it would be wise to solicit counsel from an organisation outside of your own. Not only can they help structure your organisation for efficient growth, but also advice on the most effective and equitable routes to funding.
Venture capital is not something that every new start-up can rely on, but if you are a business leader with a talent for networking – as you should be – then this could be an extremely viable route forward. Venture capitalists, at their most basic, are asset- or capital-rich individuals who offer funding to a business in exchange for equity or profit shares in the future. They can also be industry experts with valuable advice on scaling your business properly.
Outside of individual venture capitalists, there are venture capital schemes that pool the funding of many retail investors, and portion that money out to participating businesses. There is risk inherent to both sides of the equation here, though.