A-Z ways to fund your small business

Finding the funds to start your new business can be tough, but it is important for turning your dreams into a reality. In order to get things moving with your small business, we’ve come up with an A-Z of ways you can start funding today.

Angel Investor

Angel investors are accredited professionals that provide funding to small business owners which you can find on sites like Business AngelsAustralian Investment Network and Scale Investors. Remember, they probably started in the same position as you, so building a relationship with an angel investor may not be as daunting as it seems.

Bootstrapping

If the business you’re starting does not require a large amount of funding, bootstrapping may be a great option. This will involve you starting up and running your business using the money it makes, rather than outside investment.  

Credit & Debt

Business credit cards offer quick ways to finance your business and get things up and running. Treat it as a short term solution though. If you can’t make the repayments, don’t hurt your business with large debts and focus on smaller repayments to start. Know which credit card suits your needs best.

Enter a Business Plan Competition

There are plenty of competitions for budding entrepreneurs. Business plan competitions let you share and develop your business idea with industry professionals and may even see you win thousands in prize money.

Family & Friends

Borrowing from people you know, love and trust is a popular way to fund your business as they can be some of your biggest supporters. Don’t make them out to be fools though. Supply your loved ones with projected sales figures, business development plans and timelines of when they can expect to see their money back.

Government Grants

Government grants are available to fund your business, particularly if your business conducts important research, humanitarian services or caters to a community need, like a day care centre. There are plenty of options for small business government funding listed here.

Hunt down a partner

Sites like MeetUp and Google For Entrepreneurs create virtual communities that can connect you to potential partners interested in the same industry as you. Consider the financial benefits pooling resources and funds will have to get your business off the ground.

Incubators

Nurse your business to health with an incubator. Business incubators provide support through the provision of facilities, training and financing opportunities. Apply to sites like BlueChilli and Angel Cube to kick-start your business.

Join an event

Showcase what your business has to offer at things like expo’s, markets or festivals. You’ll be able to make money off of initial sales and may even attract the attention of interested investors. Companies like T Totaler and Suzy Spoon’s Vegetarian Butcher started at local markets and were able to fund and grow their business from them.

Keeping up with the crowds

Crowdfunding is one of the most popular ways to raise funds with sites like AIN, Indiegogo, Fundable, Ozcrowd and Kickstarter providing the opportunity to connect with multiple investors. Crowdfunding terms vary though, so you may have numerous investors involved in your business. At Honcho for example, investors can provide as little as $29.

Loans

Many people assume that they can’t get a loan just because they’re a small business, but banks have become more flexible toward lending over the last few years. Include these four things on your loan application:

  • Business plan: this is the most important document you need to provide to the banks so make sure to include your mission statement, strategic plan, competitive analysis, finances and any future plans.
  • Cash flow forecast: your projected cash flow position, i.e. whether you have more cash coming in than out.
  • Balance sheet: You need to be able to show your current financial position.
  • Security: do you have an asset (your house, car etc.) to put up as collateral for the loan? Keep in mind that your liability will be different for a Sole Trader,Partnership or Company.

Microfinance

If you only need a small amount of money, a micro-loan may be a great way to fund your business. Micro-loans are sums up to $5000 and you can apply for them at sites like MicroloansWallet Wizard or Business Fuel.

Nest Egg

Your business is an extension of your name, brand and values, so believe in your vision and try funding things yourself! Using your personal savings will mean you don’t have to attract investors and have the freedom to run your business as you choose. Just make sure you have enough money for day-to-day living expenses.

Other grants

Understanding what other grants are available for small businesses will increase your chance of getting one. Things like industry grants exist to support small businesses growing in certain fields, so if your business is coffee, try looking for funding opportunities in the industry’s supportive community.

P2P

Peer to peer lending is the loaning of money between two parties without the use of a financial institution. Instead of going through a bank, online sites like MarketlendSociety One and RateSetter will match you directly with a lender.

Question your costs

Before thinking of what you do need, think of what you don’t. Asking the right questions can help you reduce costs for funding from the start, so ask yourself:

  • Do I need this?
  • Can I get this later on?
  • How much of this do I need?
  • Is there a cheaper option?
  • Can I afford this?

Rent

Renting office equipment or space isn’t a way to avoid costs, but can help you reduce them significantly. If the equipment or space you require using isn’t a recurring need, renting it out for the day will help you avoid massive overheads. For example, if you’re a photographer, try working from home and only renting a studio space for shoots.

Shark Tank

Perhaps you were inspired by the show, or have sympathised for the entrepreneurs like yourself, standing nervously before a panel. If you’ve never seen it, Shark Tank is a Network Ten series that allows entrepreneurs to present their idea before a panel of investors and win start up funds, so give it a try for the fame and the fortune.

Trade

Trading or bartering is a way to swap resources with other small businesses in your position which avoids having to pay for it. You can use sites like BarterCardBarter Swap and Smarter Barter and connect with small businesses that offer services or products you need in exchange for what you have to offer.

Understand others

Get to know people who were in your position and learn how they did it. They may be able to tell you unique ways they funded their business, where they went for funding or how they juggled multiple financing types.

Venture Capital

Venture capitalists are investors that provide funding to high risk candidates, so as a small business you may be eligible. Find venture capitalists on sites like One Ventures and Venture Crowd, but bear in mind, venture capitalists focus on expanding business quickly in order to see rapid fruitful returns.

Win an award

Australian award programs exist to recognise the potential in small businesses. In Australia, 97% of all business is small, so check the guidelines on sites like Business ChampionsThe Local Business Awards, and Australian Business Awards to see if you’re eligible for an award, and the prize money to fund your business.

Xero

If you use Xero’s for online accounting software, then their partnership with Moula may help you fund your business. Moula is a lending service that links to your Xero data and can help you get a loan of up to $250 000. Based solely on your Xero details accounts, you don’t need to provide additional information when applying for a Moula loan.

Young Entrepreneur

If you’re a young Australian entrepreneur, you’re in luck. There a number of funding schemes available from the Government to provide your business with the funds to get off the ground. Find them here.

Zzzz

Don’t sleep on it. Start raising funds and make your dreams a reality today.

Bianca Farmakis