3 Ways to Fund Your New Business

3 Ways to Fund Your New Business

 

While personal debt remains a key concern for the Financial Conduct Authority (FCA) in the UK, the collective liability shared by British businesses is also worrying. This is particularly true in the current climate, where the spectre of Brexit continues to threaten the long-term growth of small and medium enterprises (SMEs) throughout Britain.

Small-business debt has been described as a distinct problem throughout all of Europe as well in a publication distributed recently by the International Monetary Fund.

Globally, too, household debt remains high, and in the US, personal debt is rising again following the dip it took after the 2008 crash.

Neither is global SME debt an isolated problem, and the OECD, the Organisation for Economic Cooperation and Development, an intergovernmental agency comprised of 35 nations, has expressed concern about the fiscal health of SMEs around the world.

With this in mind, entrepreneurs will need to take an increasingly creative approach to funding their ventures in the months ahead. If they don’t, they may find that their business becomes consumed by longer-term debt, higher trading tariffs and the spiralling cost of imports.

 

3 Ways to Fund Your Venture (Depending on its Size)

The question that remains, of course, is which options suit variably sized businesses in the current climate? Here are some ideas to consider:

 

Equity Crowdfunding for High-Value Start-ups

If you have a high-value start-up idea or a lucrative piece of intellectual property (IP), equity crowdfunding may be the ideal solution for you. After all, this will connect you with a global pool of potential investors, while the value that exists in the burgeoning business can support any subsequent equity sharing structure without compromising your own stake.

The development of an equity based model represents the latest evolution of crowdfunding, and one that increases your business’s prospects of securing a huge sum of capital. Serious investors are more likely to be engaged by such a model, for example, enabling you to fund business ideas on a far larger scale.

 

Factoring for Typical Start-ups

Without a truly unique value proposition, you may want to avoid sacrificing significant amounts of equity within your business. Instead, it is far better to seek out agile investment methods that minimise long-term debt and liability, with factoring one of the very best examples.

Factoring is a practice through which businesses sell their accounts receivable to third party investors, securing an instant cash injection that can serve as working capital. This prevents them from being bound by 30-, 60- or 90-day invoice terms, which can hinder their early growth and capacity to complete projects. Invoices can be sold as soon as they have been sent, while the business’s debt is repaid once clients have settled their outstanding accounts.

Factoring carries minimal risk and creates huge flexibility within any business, while it prevents companies from gradually accruing debt over time.

 

Invest Personal Funds into a Sole Trader Venture

If you are launching a low-cost business that will have minimal overhead and no genuine infrastructure, it seems foolish to seek third-party investment. In cases such as this, it is far better to fund your venture with a personal source of wealth, as this can help you to launch your business without incurring any commercial debt (so long as you do not commit the money as a directors’ loan).

The key element of this resolution is accruing wealth in the first place, of course, and there are numerous ways through which you can do this. One of the best options is to trade on the financial markets, as this helps you to build a diverse and lucrative portfolio across multiple markets.

Trading through an online platform helps you to access various markets and asset classes simultaneously, while it also connects you with tools that can help you to make informed (and ultimately profitable) decisions.

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source http://www.business-opportunities.biz/2017/05/3-ways-fund-new-business/