Launching a business can be an exhilarating feat, but it can also be challenging. This is especially true if you lack the funds to bring your vision to life.
Fortunately, you don’t need a stacked bank account to get started in the business world. In fact, many entrepreneurs don’t need to.
In Australia, there’s a wealth of funding opportunities aimed to help turn your entrepreneurial dreams into a reality.
From government grants to unique funding strategies, these funding options can provide you with the necessary capital to kickstart your business journey—or scale it to new heights.
Ready to set the gears of your fledgling business in motion? Here are six funding options that you can consider for your new business venture.
1. Government Grants
Here’s some good news for Aussie entrepreneurs: there’s a wide range of over 600 government grants that you can apply for to support your business venture.
Some of these grants cover specific industries and territories, so not all of them are going to be entirely relevant or applicable to your business.
But some of these grants could be dead-on relevant to you. For instance, if you operate a small business based in Kimberley in Western Australia, you may apply for this funding from a local government grant to scale and operate your business more efficiently.
Be sure to review the aforementioned database regularly to find open applications for current government grants. That website also has a short survey to help you sift through the clutter and match you with relevant grant offers. You won’t be eligible for every grant you sign up for, so consider applying to multiple ones for good measure.
These grant offers can come and go, so it’s a good idea to keep yourself in the loop regularly. Applying for these grants doesn’t cost you anything, and the potential to get thousands of dollars of funding or alternative perks for not much else in exchange can be a huge help to your business.
2. Startup Incubation
Angel investors are always on the lookout for startups with high potential—and they often conduct startup incubation programs to give budding businesses a shot at huge growth.
If you have built a well-oiled system at a small scale and have generated a respectable amount of sales with no signs of slowing down, then you’re very likely to get money from an angel investor or through a startup incubation program.
Besides offering funds to help businesses thrive, these incubation programs also offer knowledge and support to increase the chances of success and minimise mistakes.
To up your chances of getting the attention of an angel investor, embrace new technology and innovative ideas. For instance, if you’re licensed to deliver NDIS-specialised care, then get NDIS software for providers to become more efficient and stand out from the crowd.
3. Crowdfunding
If you have a solid follower base who believe in your product or service, then you can consider crowdfunding as a way to fund your business.
Crowdfunding is a type of funding that involves pooling a collective pot of money from a large number of people. The donations can vary depending on the goodwill of the donor, ranging from as little as a dollar to as much as thousands of dollars.
This type of funding is effective for business owners who have a loyal following or an established brand. For instance, businesses that are making sequels of successful debut products like a film can utilise this form of funding to source enough capital for their operations.
That said, products or services that have been marketed effectively can also ride a wave of donations from crowdfunders.
To further incentivise their core market, businesses also offer rewards for donors who have donated an amount of money above a certain threshold.
For instance, $1 donors may be able to access exclusive behind-the-scenes videos of how the product is made. $10 donors, on the other hand, may have access to a pre-ordered product. Ultimately, the reward given is up to the business’s discretion.
4. Bank and Credit Union Loans
A popular way of getting funding for your business is by applying for a loan from financial institutions.
Banks offer business loans in the form of lump-sum payments according to your needs and ability to pay back. These lump-sum payments can be used to immediately to build your business.
How it works is that these institutions will glance at your credit score and assess your financial statements to determine if you’re worthy to be handed a loan.
Many small business owners may not be able to secure a loan through banks because of a below-average credit score or a short financial history.
To improve your credit score, you should start by submitting error-free credit reports on time, paying your dues on time, and not maximising your allowable credit spend.
If you and your business have a decent profile, the bank will hand you a loan with repayment terms. To get the best deal, consider seeking out loans from different banks and choose the one that has the most suitable term length, borrowed amount, and interest rate.
Some banks may provide lower interest rates to business clients if you provide them with an expensive asset as collateral. Such a loan is called a secured loan.
If the bank or financial institution doesn’t require a client to provide collateral, then that type of loan is called an unsecured loan. These loans often come with higher interest rates to counter the risk of defaulting or non-payment.
5. Friends and Family
While not the most dignifying way to request funds, asking money from your friends and family is a viable way to get a fair amount of capital. This is especially true if your loved ones have enough money and the will to help you out.
You don’t have to ask close friends and family members exclusively. Entrepreneurs can leverage their professional network, build rapport with them, and then request some financial assistance.
Of course, don’t immediately expect your friends to give you cold, hard cash for nothing at all. They may arrange an agreement wherein you’ll pay on a term basis. These personal agreements can often be cheaper than the rates from lending corporations.
By loaning from friends and family, you can enjoy more flexible terms and get access to immediate capital—which can help you scale your business more quickly.
6. Credit Cards and Line of Credit
A line of credit is a flexible funding option that grants business owners access to a predetermined financial figure. A credit card works similarly to a line of credit, but it’s often for smaller purchases due to its generally lower maximum allowance.
Having a line of credit can be a great fund source since it can promote healthier cash flow and short-term, day-to-day expenses
Unlike traditional loans, you only pay interest on the amount you use with a line of credit, not the entire credit limit. This makes a line of credit a cost-effective solution for businesses that work best with a healthy cash flow.
Securing a line of credit typically requires a good credit score and the ability to repay. It offers the flexibility to borrow and repay repeatedly, giving your business the financial agility to respond to opportunities and challenges effectively.
Be sure to improve your credit score and maintain it whenever possible, not just for the sake of financial wellness, but also to help you gain access to these credit options.
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