Money makes the world go round and without it, you won’t be getting your business startup off the ground. The economy might be growing, but getting banks to lend to business startups is still frustratingly difficult. It has spawned a rise in alternative finance and increased peer-to-peer lending, invoice finance, business angel funding, crowdfunding and even unsecured business loans for startups are becoming key to help launch new businesses.
If you are a small company, the chances are you’ll have tried to get a traditional bank loan. Unfortunately, the banks have been reducing the amount they lend consistently over the last few years because, despite what they say, they remain risk-averse.
It means there are fewer avenues available for funding your startup. The biggest problem startups have when seeking funding is the lack of sufficient, audited accounts. One or two years is difficult, two or three years worth is out of the question. So alternative funding options have become an increasingly popular method of financing.
Alternative funding options for startups
You have probably already exhausted other avenues of funding, but it’s worth examining the options:
Peer-to-peer lending
This method has its advantages because you advertise your company’s business and loan proposition investment websites and wait for an opportunity to come along. It can, however, take a while for an investor to understand your business potential and sometimes it doesn’t arrive at all. If you can’t afford to wait around forever, amending and adding to your pitch, you’ll need something else.
Invoice finance
Invoice finance offers a great stepping stone to accessing ready-to-buy big clients meaning you won’t have to wait until you get paid in order to buy more stock or pay your way (staff, premises, stock etc.). But when you don’t have any big-paying clients on board yet, you still need to make, market and buy stock.
Pension scheme
Utilising your pension can be a great way to reap rewards, either through a SIPP or a SAAS can offer a way to loan ready cash to benefit your startup, although be prepared to meet strict repayment and qualifying criteria. This can be a great option for a business owner in their 40s or 50s, but for the twenty/thirty-somethings, whose pensions aren’t big enough yet, it isn’t an option.
Crowdfunding
Like peer-to-peer funding this involves a lot of detailed projections and creative pitching, but moreover, a lot of waiting time that new startups don’t have. If you can offer significant rewards-based or equity returns for potential investors, it can be a highly beneficial method of finance. Be prepared for revealing your key financial details online to (potentially) hundreds of investors – if you are lucky.
Grants
There are many that you may be eligible for, ranging from small local authority opportunities to bigger regional development funds. They will probably not be able to fund all the costs of your start-up and can often involve substantial amounts of form-filling, but they are free after all.
How unsecured business loans can fund your business startup
Raising finance externally can be a liberating launch pad when considering your business growth. If putting up any of your business or personal assets as security sounds scary then you are in good company because many startups turn to shorter-term, larger sum funding in the form of unsecured business loans.
As opposed to secured loans, which can be tougher to access and require a greater amount of time taken to approve them, if you have a reasonable credit score you may be able to access an unsecured loan, offering greater flexibility than either secured loans, or the above forms of alternative finance, and leaving you in full control of how to use your loan.
When you have a startup, you need funding straightway and few finance methods work as well an unsecured loan; they don’t involve using any assets or securities against the loan, either personal or business.
Once you’ve secured this funding, growth opportunities are abundant. And if you’re looking to take it to the next step, there are many ways to advance.
Try another market
You may be doing well in your current market, but it can often be the right time to start looking at other markets. Introducing other revenue streams can help when your current market softens. So ask yourself whether you can introduce your business to other markets; like schools, businesses or different industry sectors?
Buy another business
It’s common for one business to achieve strategic growth through the acquisition of another company. There aren’t many big companies that have managed to get where they are today without buying another company somewhere along the way. Buying another business means expanding market share, resources, economies of scale and ultimately growth.
Take a leaf out of the banking, telecommunications industry and other rapidly changing industries that view other companies in their sector as commodities and stepping stones to bigger market share and more profits.
Invest in technology
Having you got the right equipment and technology in place to make your business more efficient? It is often a growth strategy ignored by businesses. When you consider newer, or at the very least, the right technology, you can expand what is possible to produce and develop. Instead of struggling every day with equipment that fails to maximise your time and workforce, and limiting the extent your company can grow, new technology can mean your business can do more without employing more people.
Diversify
This is an excellent growth strategy as it allows you to access other income streams – because coffee shops don’t just sell coffee! Business growth put simply is an increase in what you already do, but you can always try something different and explore other income streams. This might include expanding into different products, making complementary products or providing services you have identified as being in need by your existing clients.
Develop your sales
Whatever your product you can sell more of them if you increase the time you spend on making sales. The world is full of great products (and equally full of companies offering great products, yet still struggling to survive) but it’s the companies that commit to selling their products better than everyone else that succeed. You can take a leaf out of their boom and expand your sales department.
Use trade shows
Participating in a trade shows can get your product or service directly into the view of potential customers. Customers who are already interested in the products and services you offer. It is a combination of marketing and direct sales. You can select the trade shows that will benefit the demographic and geographical area you are targeting.
Exporting
Have you thought of expanding into international markets? Although it is a commitment in terms of time and finance it can be rewarding, opening up your products to millions of potential buyers.
Your business growth doesn’t have to mean more of the same; pushing people to do more in less time, there are many strategies that can help your company succeed in producing more for less. You can diversify your product, acquire another business, invest in your sales and marketing, target overseas markets or just develop on the technology you are using.
For first-time business owners, without any assets to offer, having access to money, quickly, without having to wait around forever, before being told the answer is ‘no’, makes unsecured business loans so attractive.
What an unsecured loan can do is offer you credit at a time when you most need it, usually when the viability of your business is on the line in some way. To learn more about our finance packages call us today on 0333 006 9141 or request a call back via our contact page.
