Attitudes towards work are shifting. Many people are realising that there are more options available to them than an unfulfilling 9-5.
This has led to what many are calling ‘the great resignation‘ – workers across the world quitting their jobs in record numbers. Rather than moving into another similar role, this can be a great opportunity to finally kick start that business you’ve always dreamed about.
As a first-time entrepreneur, you’ll likely need some external funding to get your idea off the ground. There are plenty of options out there for sourcing financial backing or loans, and the option you choose will likely depend on your industry, the type of business you’re creating and how much cash you need.
Small business loan
A small business loan is probably the most conventional way to get funded. It’s a scene that plays out on TV all the time: the bright young entrepreneur walks into the bank with their business plan and proposal under their arm, ready for a grilling about their company. In reality, it’s not quite so dramatic – although you should be prepared to share a robust proposal with the bank, who want to be sure that the money they’re lending is going to be spent wisely.
All of the major UK banks offer funding options for small businesses, and most also provide a loan calculator on their website so you can quickly work out how much you could borrow and what the repayment costs will be.
The government often changes the exact support offered to small businesses and entrepreneurs, but there’s almost always some kind of grant available. Typically, grants will be offered to businesses that plug a gap in the country’s economy, or provide opportunities in one of the government’s priority areas. There will be hoops to jump through and criteria to fill – but if you can make it work, this is money that doesn’t need to be repaid.
Find a list of grants here.
Business overdraft or credit card
Let’s say you need a little bit of cash to get things going, but you don’t want to go through the lengthy application process associated with bank loans and grants. A speedier option could be applying for a simple business account with an overdraft facility, or a credit card.
The flipside to the increased speed and easier application process is the higher cost associated with these products – both in terms of interest rates and potential additional fees – as well as the lower overall amount available. They’re more likely to be suitable if you only need a relatively small amount of money and expect to pay it back quickly.
Perhaps your exciting new idea is a product or item rather than a fully-fledged business. In that case, crowdfunding could be an exciting option. Platforms like Kickstarter and IndieGoGo are still hugely popular for people, and are used to launch everything from board games to YouTube series.
With crowdfunding, you are relying on the support of a fanbase who are prepared to stake their money in return for the promise of whatever it is you plan to deliver. This means that it can be tricky for those without an existing audience to get the traction needed to reach their funding target. However if you manage to get support for your product, you’ll also be building a community of supporters.
Business accelerators offer more than just money – and if you’re doing this for the first time, that additional support might be the key to success. From training and access to a network of other professionals, to legal support and access to mentors, accelerator programmes are designed to get fledgling companies off the ground with speed and efficiency.
In return, they’ll usually take up to 10% equity, meaning that they have a vested interest in seeing your company succeed. As with bank loans, you’ll need a clear plan in order to get into a programme and places are often highly competitive.