Our Passion Pioneers campaign aims to empower you to take control of your future, securing your funding as the first step.
Your freelance job, side hustle or passion project can become its own business – but how do you fund it?
as part of Marie Claire United KingdomPassion Pioneers campaign, in partnership with the entrepreneurial platform go daddywe describe several ways to finance your business.
Think of this as your guide to understanding finance, because looking after your financial well-being is so important. From personal loans and crowdfunding to venture capital, all that’s left to do is decide which one is right for you and your business idea.
How to finance your business…
Crowdfunding is a type of investment where the general public donates to help raise funds for their specific need, usually in exchange for rewards and recognition. Everyone has heard of GoFundMe, right?
It’s free, and it’s a great way to get funding without accessing traditional forms of bank lending (read: accumulating debt).
It can take a long time to reach your goal, and if you’re relying on crowdfunding, you could face legal consequences for failing to deliver on business promises (having a contingency plan in place can help avoid angry donors and legal action).
2. Venture capitalists
They are investors who offer a considerable amount of money in exchange for participation in the business. Often their goal is to help the business grow quickly so they can get a good return on investment in a short amount of time.
If you’re a start-up with high growth potential and don’t mind giving up some capital, VC funding is a good way to secure funding. In addition, venture capitalists can offer expertise to help develop the business.
These investors typically have a say in the company’s decisions. You are likely to have to give up a large part of your business, due to the significant amount of funding provided.
3. Bank loans
Traditional bank loans and overdrafts are still a popular source of funding for many businesses. Used correctly, they provide a simple and effective way to fund your business growth.
Some banks offer low interest rates depending on your credit score, and you won’t have to give up any control over your business.
The process of obtaining bank financing can be long and time consuming. Also, be sure to do your research on the various types of loans, terms, and interest rates that come with each option.
4. Family and friends
Family and friends who believe in your idea can finance your business and offer advantageous and simple payment terms.
You can offer them stock in your company and pay them back with or without interest. Plus, you have a support network ready.
They may lack investment experience and be unable to advise. And, unlike venture capitalists, the money available is limited. Finally, buying into the same investment can risk damaged relationships.
To learn more about the campaign, which aims to empower women to take the next step towards turning their passion into a viable business, visit marieclaire.co.uk/passionpioneers.