The 21st Century has already seen countless brands who have taken their business offerings to the next level and ‘made it big.’ From the likes of Facebook and Twitter to Netflix and The Body Coach, a wide range of industries and brands have emerged, teaching us that there are many ways to make it and fund a great idea.

Startup funding

Whilst the huge brands above may not be something that can be competed with per se, there are many ways in which you can start up a business or take an existing business to greater and higher places. It may be difficult to get the finding and financial injection that you need, but once you do it is hugely rewarding and it will be the start of something you will never look back from.

1. Using your Savings

Piggy bank and businesswoman

Many people save up money and deposit their hard-earned cash into a bank account or building society. However, current interest rates are very low (often less than 1%.) This means that even a large amount of money saved up in a bank account will struggle to generate any beneficial interest. For example, if you have £10,000 of savings in a bank account with 0.5% interest, each year you will only earn around £50 which is hardly enough to change your life and to complicate things, many of the higher interest accounts require you to ‘lock’ your money in for several months or years.

Instead of just letting your money sit in an account, not making much money, perhaps consider investing some or even all of it into an existing business. Alternatively, you may have a business that needs a bit of extra funding to get to the next rung on the business ladder. Investing your savings into such ventures can yield hugely rewarding results, leading to you making your money back many times over.

To make matters sweeter, in the modern day, many businesses (such as TechRound) have started up purely online and from low-cost premises such as industrial units or smaller offices, keeping overheads down and allowing most of the money to be reinvested into the business itself, feeding the cycle of investment and return.

2. Business Angels

Angel investor

Business Angels are people who are willing to invest huge sums of money into a business in exchange for equity and share of the business and its future profits. Whilst it may seem counterproductive to give up any percentage of a business, a business angel could likely make you more money in the long run.

For example, you have a business making bespoke products but you need to buy further stock to increase your offering and offer new products, which will cost more. However, your money is tied up in the business and you have wages to pay and rent and expenses too. Therefore, you seek investment from a business angel and find a willing investor.

The investor says that they will invest the money, and a bit more to cover other costs in exchange for a 10% share in your business. By accepting their offer, you can purchase the required items and sell them, earning you further profits and helping to further expand the business, even after paying your investor. In addition, in time, you may even purchase those shares back from the investor.

These Angels could also help you if you need to expand your business through advertising, for example to attract fresh, new and potentially business-changing candidates requiring you to pay a specialist recruiter to do so in the most cost effective, yet business friendly way (source: Redstone Commodity Search).

3. Banks and Loans

business banking
photo credit: Elliott Brown

In past times, this was the only viable way of securing large sums of money for a business venture. You would prepare all your financial documentation, proof of address and various other business-related documents and go to see the bank manager. You would run him or her through your business proposal and your detailed business plan. They then would assess the numbers, look at your financial and business history and decide whether you are a good prospect to invest in and many people got investment and business loans in this way.

However, nowadays, with stricter criteria and regulations in place, banks are not lending as freely and very often, going to a bank to apply for a loan for a business will lead to a rejection, meaning many people avoid them altogether.

Other types of loans can help solve the problem of short term funding and this may include things like payday loans, instalment loans and similar. However, their interest rates are much higher meaning that they are very risky options, especially for a business.

4. Bridging Loans

Bridging loan

This is a popular way for businesses who need that extra cash injection leading up to something big. A bridging loan effectively ‘bridges the gap’ between the time of the loan and a predetermined event, say a big business deal. These loans must be secured on a property but are typically funded in a few days (Source: SPF Loans) and can be the difference between making or missing out on a potentially life-changing business deal.

Say you are establishing a property development business and have a large deal in the pipeline, when another large potential deal pops us. Rather than having to wait for the initial deal to go through and then generate money to fund the next, by which point you would be likely to miss out on the second deal you can take out a bridging loan.

You therefore secure a bridging loan on one of the properties in your growing portfolio, use the money for the second property and sell it off. With the money from the sale you are able to pay off the bridging loan and make a profit for yourself, ready to move onto the next deal, helping you grow your business and make it able to keep up with the competition.