Edwina / Published on March 13, 2013
Research from Amigo Loans recently showed that a mere 20% of micro-businesses were supported via a bank loan, whereas one in six had to resort to a payday loan to fund their business, and just over a tenth borrowed from friends or family. For a business that has recently started up this is particularly bad, because if you lack sufficient cash then falling behind with payments (they typically have to be paid back within one month) could prove disastrous for the company. If you think it’s necessary to take out a payday loan, first seek financial advice before considering taking out this high interest loan.
Additionally, the quarterly Finance Monitor for SMEs showed that half of all those applying for a first time loan were rejected, whereas only a fifth were rejected on reapplying for financial help.
So what other things could you consider, aside from taking out a bank loan for your new startup?
- Use “unpaid labour” in the form of utilizing expertise – instead of someone investing in cash, code could be written for your website
- Ask for help from friends and family, perhaps in the form of buying ownership stakes
- Think your idea is imaginative? Use social media sites such as Kickstarter and Indiegogo to appeal for financial support
- If you can show your startup has potential to market valuable new goods/services, then you could seek out a Venture capital firm (they invest pools of money raised from wealthy individuals)
- Finally, access your savings or if you have unwanted items lying around your house, sell them via Choiceful.com’s marketplace. We’ve got categories such as Electronics, Home & Garden, Movies, Health & Beauty plus more to choose from. You’d be surprised at the amount of stuff you don’t use!
Armed with this, now you know what to think about when starting up your own business.
