There was a time you could walk into your bank with a reasonably well thought out business idea and leave within an hour with a lovely loan and dreams of untold possibilities.
That time was before 2008 and it didn’t matter that you had never run a business before, the culture was risk and expansion. Talk to anyone these days and they will tell you it’s all changed, the banks aren’t lending any more.
While that isn’t quite right (UK finance estimates £5.9bn in new loans were approved to SME’s in Q4 2017), the good news is there are still avenues to get your business idea off the ground. Here are just a few:
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Friends and Family Often the first people you share our idea with is your friends and family. In addition to moral support, often they can also be a source of financing to get you off the ground. Upside: Include no credit check, more flexible decision making, possibly low or no interest and you have willing backers who will be urging your idea to the winning post. Downside: If it goes wrong, you have to face them regularly and see any impact of lost money first hand.
Sell your product or service in advance. When we launched our web design firm, we actually sold our services to 12 companies before we’d even built our own website. Taking deposits helped us pay salaries for a while and helped us get off the ground quickly and also validate the business idea. Upside: You get instant validation of your idea including any forecasts. Downside: You have to spend time selling rather than creating your product or service.
Crowdfunding: This is a variation of selling in advance. Here you go to a site like Crowdfunder or Kickstarter pitch your idea to the public and they can commit to purchasing various financial levels of support, usually in return for advanced access to the product and a discount. Upside: Very quick to do and validates your idea (or not!) with little up-front cost. Downside: Initial sales are at a lower margin that you may like. Possible negative press if you are late delivering a product or it’s standard isn’t terrific.
Read: Sometimes you just need to rip it up and start again
Ad:Venture: We are blessed in this region to have access to a program called Ad:Venture from the Leeds City region team (which includes lots of Yorkshire) .They provide mentoring and training but being part funded by the European Region Development fund they also can provide up to £25,000 for businesses under 3 years old. Upside: An expert will sit and go through your ideas for growth and mentor you in making sure it’s a suitable option for your business. Downside: They fund half of eligible purchases and its only available to companies primarily servicing other businesses. (so most retail outlets wouldn’t qualify)
There are so many more options also available from grants, competitions and outside investors. Don’t believe the doom and gloom, if you have an idea go for it and remember to ask. “Who’s got my money?”