April 28th, 2014.
The Top Three Alternative Business Finance Options
What do you do when you exhaust every finance option you can think of? You either give up or look for more. As a business person, giving up probably isn’t in your vocabulary! Luckily for you, there are plenty of places to squeeze money from after banks and mainstream lenders refuse or if you want an alternative investment rather than a loan.
Here are the top three places to find new financing for your business:
Business Angels
What better way to get a vital investment than by finding someone who is interested in the business itself? Business angels will help to finance your company, giving you the cash you need to get up and running. They aren’t in it out of the goodness of their hearts though, most investors expect to receive a 20-25% return on their initial investment.
Another benefit of using business angels is that they often invest into companies that they know a bit about in terms of how the industry works. This can provide you with the extra knowledge, connections and other benefits that can take you from being a start-up to a small business in no time.
Crowd Funding
In recent years there has been a huge increase in the number of companies turning to the general public to provide the finance they need to get started. This is especially prevalent in companies who are creating a product that fills a gap in the market. However, it is possible to do this for companies providing services through specialist networks – generally there will need to be some sort of incentive, like stocks and shares in the future or discounts on your goods.
This won’t work for every company, and starting to sell stocks and shares can bring on a massive change in the company’s structure. Before leaping to this stage it is important to investigate whether or not this is a suitable solution for your business.
Strategic Investors
If you can sell your business as being ‘the next big thing’ then you may just be able to grab yourself some strategic investors. These are people or companies who are looking for ways to make a profit by financing other company’s projects. Finding these people and showing them how promising your company is could be all it takes to get the finance you need to succeed.
Generally these strategic investors are large companies who often want to take a cut of the profits your business makes. This may mean that they are only interested in investing while you are making a profit and will leave the moment things appear to be going south – be sure to do your research on the investors carefully, and thoroughly read any contracts!
At Pure Commercial Finance we can pitch your business directly to investors who are suitable for the amount of finance you need and the industry you’re in. Talk to our friendly team today to find out more!