When you start a business, there’ll usually be a period when you’re investing lots of time, effort and money before you begin to make a profit. It’s important to research your market to make sure your customers will really pay for your product or service before you do this. Whatever stage you're at, there are plenty of funding options to help get your idea or business off the ground. Check out our suggestions below.
If you need some initial funding to test and develop your business idea, you might be able to get help from a support scheme in the form of a grant or loan, which may also come with some additional business support to help you move your business idea forwards.
You can search for local sources of support using the Grant and Support Finder.
Get a bank loan
Once you can show that there’s a market for your idea, one option for funding your start-up costs is getting a bank loan. You’ll need to be able to:
- Give the bank realistic cash flow forecasts
- Prove that you’ll be able to pay back the loan with interest
The bank might require you to provide security against your loan, like your house or car, in case you don’t repay. You should think carefully about how much risk you’re willing to take on before you get a loan or give any personal guarantees.
For further information on taking out a loan, visit our Funding Support page.
If you need more investment, you might be able to raise money to fund your growth plan by selling shares in your business. You can do this by asking friends and family to invest. However, if this isn’t enough you can look for sources of "equity funding," including:
- Business Angels - wealthy individuals who invest in start-up businesses
- Venture capital from companies who invest large sums of money in businesses that they think will grow quickly (also known as ‘private equity’ companies)
- Crowdfunding - a large group of people invest money in a business idea, usually via the internet
- Alternative sources of funding, such as "peer-to-peer lending"
Any outside investors will own the company jointly with you and the other founders. They have a say in the running of the company, and are entitled to get a share of the profits, known as dividends.
You should obtain legal advice before selling shares in your business.
Not sure which route is right for you? Speak to a Growth Hub adviser.