All businesses, be they small single owner or large multinational, require capital to operate and grow. Most business owners know the main ways to generate this capital, from private investors to bank loans and pre-agreed overdrafts, but there are a handful of alternatives if these don’t appeal to you.
We have highlighted the three that we believe would be most beneficial in general, but you will also need to consider which will be best for your business before proceeding.
Reward-based Crowdfunding
Crowdfunding is a great way for new businesses to get off the ground, especially as it can be difficult to secure the initial capital without a trading history. You can raise funds through sites like Kickstarter by preselling products or offering rewards for providing the initial funding. This method helps generate capital through private investment from an online community without diluting ownership or accruing any debt.
Grants
Grants provided non-dilutive capital that does not need to be repaid, either like a traditional bank loan through monthly payments or by providing equity in the business. Many Governments, NGOS and corporations offer grants to help support innovation, sustainability and various other social impacts. While the application process can be difficult, time consuming, competitive and requires detailed documentation it can provide “free” capital investment in the right circumstances.
Invoice Factoring
If you’re in an industry that typically has long payments terms, such as 60-90 days, you can find yourself waiting for client payments for an extended time. To avoid this cashflow delay you can use invoice factoring, in a nutshell you “sell” your outstanding debt to get the cash in faster. This does come with its own costs though, as you will incur factoring charges reducing the amount you will actually receive.
If you are looking to generate additional funding, or would like any more details on the above, please get in contact with us.
