Funding your own business
So you’ve got a concrete business plan, now you just need to secure that all-important funding. But who funds a young person’s business? More people than you think. Here’s advice and support for getting the money you need.
The Prince’s Trust Enterprise programme
If you’re unemployed and aged 18-30, this programme could help make your business idea into a reality. It involves a four day course where you’ll learn all about running your own company to see if it suits you. Following this, you’ll get one-on-one support and mentoring to help you get started.
Important – as part of the Enterprise programme, you can apply for a start-up loan but you’re NOT guaranteed to get one. They can certainly help you apply though, or point you in the direction of other suitable funders.
This is a not-for profit organisation supporting entrepreneurs aged 16-30. It offers:
- A networking and discussion forum for young entrepreneurs
- A monthly competition for young people to win one of up to five £1,000 prizes to develop an unusual business idea
- An annual chance to win the Shell LiveWIRE Entrepreneur of the Year award, with a prize of £10,000, and heaps of media exposure for your business
You can create a free account on the website and then create a 30-second elevator-pitch video about your business ideas.
Borrowing from the bank
They’re not at their most generous at the moment, especially to young people with no career history. However, if you’re business plan is dynamite, it’s worth approaching them. There are two main ways to get business money from a bank – but with each one, you need to be really careful and clued-up about what the risks are. Ideally, speak to an independent financial advisor before you approach a bank.
This is a short-term fix to spending more money than you currently have. You’ll need to agree an overdraft limit with your bank, and you’ll probably have to pay interest or a fee.
Watch out though
- You’ll get a hefty charge if you go over your limit
- Your bank can decide it wants the money back AT ANY TIME
2) Business loan from the bank
These are tricky to get, but possible. Make sure you shop around for the best deals, rather than trying your regular bank. Look about for banks that are promoting business accounts at the moment. The bank won’t give you money without security in case it all goes wrong, so there’s an element of risk. Banks will often ask you to put your own money/house/livelihood on the line – don’t sign anything away that you can’t risk losing.
Crowdsourcing funds for a new business
Rather than hitting one bank for one lump sum, why not hit multiple strangers for lots of tiny bits of cash? Crowdfunding websites such as Kickstarter and GoFundMe can help you cobble together the cash you need to get a project started. Make sure you read all the small print though. Usually these websites take a percentage of the money. They may only give you your donation if you reach your full intended amount. And some won’t accept funding for businesses, only creative projects, like short films or albums. But – hey – a one-off great creative piece could raise awareness of your talent and make it easier to secure funding later.
Find a private investor
Similar to Dragon’s Den, there’s plenty of moneybags out there willing to invest in The Next Big Thing. There are loads of websites, such as Angels Den, where you can join to get access to these business bigwigs. You submit your idea and expertise, and you’ll be given training and funding in exchange for a cut of the profits. Be wary though. There’s often an upfront fee, a ‘success fee’ and you’ll be signing away a big hunk of your profits before you even make them. You’ll also be constantly answerable to your investor, so you won’t have the independence you may crave.
Other places to try
- Community Development Finance Association represents institutions which provide loans and support
- British Business Angels Association is a directory of investors interested in supporting new businesses
- The National Federation of Enterprise Agencies is a directory of local enterprise agencies which could be waiting to help you
- Scotland Business Gateway offers practical help and support to Scottish entrepreneurs
- Striding Out offers help every step along the way, from developing and planning your idea to growing your business
Photo of girl and debit card by Shutterstock.
- Looking for a mentor to help boost your knowledge and skills? Find a youth zone close to you.
- Reveal your skills with Define Me and find the right words to tell employers.
- Download Motimator - an app that helps you get the career you want - by giving you a gentle kick up the ass each day when motivation is running low.
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By Holly Bourne
Updated on 29-Sep-2015
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