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Our Passion Pioneers campaign is all about empowering you to take control of your future, and securing your funding is the first step.
Your freelance job, side hustle, or passion project could turn into your own business, but how do you finance it?
As part of marie claire ukPassion Pioneers campaign, in partnership with the entrepreneur platform go daddyWe have outlined several ways to finance your business.
Think of it as your go-to guide for understanding financing, because it’s so important to take care of your financial well-being. From personal loans and crowdfunding to venture capital, all that’s left to do is decide which one is right for you and your business idea.
How to finance your business…
Crowdfunding is a type of investment where the general public donates to help raise funds for their specific need, often in return for rewards and recognition. Everyone has heard of GoFundMe, right?
It’s free and a great way to raise funds without accessing traditional forms of bank loans (read: racking up debt).
It can take a long time to reach your goal, and if you rely on crowdfunding, you may face legal consequences for not keeping business promises (having a contingency plan can help avoid angry donors and legal action).
2. Venture capitalists
These are investors who offer a considerable amount of money in exchange for shares in the business. Often their goal is to help the business grow quickly, so they can get a good return on investment in a short period of time.
If you’re a new business with high growth potential and you don’t mind giving up some of the capital, venture capital financing is a good way to get funding. Additionally, venture capitalists can offer expertise to help develop the business.
These investors often have a say in the company’s decisions. You will likely have to give up a large part of your business due to the large amount of funds provided.
3. Bank loans
Traditional bank loans and overdrafts remain a popular source of financing for many businesses. Used correctly, they provide a simple and effective way to finance the growth of your business.
Some banks offer low interest rates, depending on your credit score, and you won’t have to give up any control over your business.
The process of obtaining bank financing can be long and time consuming. In addition to this, be sure to research the different types of loans, the terms, and the interest rates that come with each option.
4. Family and friends
Family and friends who believe in your idea can finance your business and offer you advantageous and easy payment terms.
You could offer them shares of your company and return them with or without interest. Plus, it has a support network out of the box.
They may lack investment experience and may not be able to advise. And unlike venture capitalists, the money available is limited. Finally, buying the same investment can risk damaged relationships.
To find out more about the campaign, which aims to empower women to take the next step and turn their passion into a viable business, go to marieclaire.co.uk/passionpioneers.