You had an idea that has now turned into a product. You have sold that product to a small client group to test the demand. Sales have increased to the point where you need to take your fledgling business to the next level.

To achieve success, you realise passion and drive are not the only resources required. You need a capital to take your ideas further. It would be a kick start until the product begins generating a profit. So, the search begins for the best funding opportunity for your new venture. Check out these tips from 16-successful-australian-entrepreneurs.

“The knowledge that you have emerged wiser and stronger from setbacks means that you are, ever after, secure in your own ability to survive” J. K. Rowling.

Traditional Lenders and Other Providers:

The large banks have strict criteria for loans, with most new businesses unable to demonstrate financial security and a sustained operational performance. The big banks also prefer loans that are larger than what most new businesses request, as this is a far more profitable return on the initial investment. This avenue of finance is generally the toughest source to seek funding but not impossible.

“A bank is a place that will lend you money if you can prove that you don’t need it.” Bob Hope, US Entertainer.

There are a range of products available through financial institutions that have specific purpose and different set of repayment requirements so it is worth Comparing the different Small Business Loans.

Alternative lenders generally function on reduced profit margin as they have lower operational costs to cover.  These lenders are a small finance firm looking for short term turnaround on their initial funds. This allows them to provide small business loans that big banks shy away from.

Small businesses find these lenders have a quick turn around and a reduce application process. This funding avenue has a greater chance of being approved than with larger financial institutions.

The New Kind of Investor:

This investor prefers to work with new businesses by putting finances into their product. They have an interest in the product that is being produced. They also add value to the investment by providing mentorship and support to that business.

  •         Venture Capitalists usually focus on businesses that are established and less of a risk.
  •         Angel Investors may look for a percentage of the profit from the business in exchange for investing.

With these Investors, the new business may lose some of their autonomy due to the mentoring arrangements yet gain invaluable business acumen from their supporters. Here are some additional funding sources of interest such as Options for funding your Start-up.

Crowdfunding has become another new investment pathway in financing new businesses. Members of the community can choose to support new start-ups by providing funds and in return receive incentives for their contribution. This is the online version of the pub test, you are basically promoting yourself and your product through the personal touch.

Crowdfunding is not always successful. There are a lot of crowdfunding opportunities that don’t attract enough interest. Is your product going to stand out amongst the music and movie incentives available with other projects?

Government Start Up Schemes:

There are some government supported Start Up grants that can be accessed but like these types of schemes they are competitive with limited funding and the extensive application process. Yet, with a good business plan this could work.

These schemes can involve business incubators and hubs, investment in research and development of products and attracting outside interest in your business. If you are interested in finding out further details check out 10-top-government-grants-for-start-ups.

Applying for a bank loan is not always successful for a new business; that is why new funding sources have popped up in the finance arena. These additional services have provided a minefield of different products to shift through to find the right funding source for your business. It all depends on doing your homework to find the right funding solution that works for you.

“If I had asked people what they wanted, they would have said, “A faster horse.” Henry Ford

Top Tip: Review your business plan to make sure it is flawless and accurate.

Why-business-plans-dont-get-funded.

5-best-ways-for-funding-a-startup.

What is Venture Capital?

Getting Started for Small Business.

 

About the Author

Kylie Glover writes about small business finance for Authorflair from personal experience. Having been a part of many successful start-ups in Australia and New Zealand she is motivated to share her insights and writes for several publications in Australia and abroad.


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