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Creative Ways to Fund Your Start-up

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Creative Ways to Fund Your Start-up

Despite the sustained uncertainty surrounding Brexit and the decision of Prime Minister Theresa May to finally trigger Article 50, businesses in the UK remain decidedly upbeat.

According to the ICAEW UK Confidence Monitor (BCM), the prevailing level of business sentiment increased from -8.7 to 6.7 in the second financial quarter, as firms showcased incredible strength and resilience in the face of austerity.

While this says much about the sense of determinism that exists among today’s entrepreneurs, the practicalities of Brexit cannot be ignored. The British pound (GBP) is likely to be subjected to sustained devaluation, for example, while the rising cost of imports and price hikes will also take their toll on businesses and consumers alike.

3 Creative Ways to Invest in Your Start-up

With this in mind, aspiring entrepreneurs may want to seek out creative ways of investing in their start-up, in a bid to minimise long-term debt and retain the vast majority of their equity. Here are some ideas:

  1. Build and Utilise Personal Wealth

If you are serious about minimising the debt burden that exists within your business, you should seriously consider accruing personal wealth and reinvesting this accordingly. This transfers the burden of debt to you as an individual, while enabling you to explore a host of unique and relevant investment vehicles that are entirely separate to the venture.

The key is to build a diverse investment portfolio, and one that minimises your own personal risk by driving short and long-term returns. You can invest capital in a range of investments such as shares, bonds, funds and property, in a range of accounts such as ISAs and SIPPs. These give you the potential to build longer-term gains for you, your business and your family.

  1. Sell Your Accounts Receivable

If you have just launched your start-up and begun to issue invoices for completed works, you may find that your venture is bound by 30, 60 or 90-day payment terms (depending on your marketplace and the clients you interact with).

This can create issues from the perspective of working capital, which in some instances may prevent you from accepting further work.

This can be negated by selling your accounts receivable to third-party investors, who will pay the amount owed in full once the invoice has been issued. This creates an instant source of income into the business, and simply serves as an expedited payment that boosts your real-time cash flow.

While it creates short-term debt within the venture, this can be repaid once the invoice in question has been settled by the client. This type of cash injection is therefore relatively risk-free, while it also provides a vital source of capital to new ventures that are bound by their client’s payment terms.

  1. Embrace Affiliate Sales

 In some instances, your venture may have products or services to sell but no viable business infrastructure through which they can effectively be marketed or distributed. This creates an entirely different kind of challenge, and one that can be solved by selling your goods directly through affiliate partners.

These include online giants like Amazon, who empower independent brands to sell their goods through an internationally accessible website. These outlets have already invested heavily in infrastructure and building a global audience of consumers, and your start-up can access this simply by paying a fixed commission fee on each individual transaction that you complete.

This is usually around the 10% mark, which is a small price to pay given the total revenue that you can generate through affiliate selling.

The key is to target relevant affiliate partners, which either offer access to a global audience or consumer segment that you can effectively target. From here, you simply need to ensure that your products and packaging are aligned with the brand’s value proposition, particularly if you are looking to sell in a competitive space.

 

I am the founder of Startup Today. I am the main writer and have put in many hours of work into creating this blog. If you want to find out more about me then lets get in contact.

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