You’re on your way to starting your business; you’ve figured out your place in the market, and how your product or service is going to stand out amongst the competition. You’ve figured out your business structure, created a business plan and conducted exhaustive market research to determine who to market to, and how to do so. With all of this research done, you’re almost ready to get down to, well, business; you just need the money to do so.
You can finance your business yourself; this has a lot of advantages. First, you won’t be beholden to anyone else; any profits will be entirely yours to do with what you will, and you can direct the business in any way you want, without a board of stakeholders giving you their two cents. The flipside of all this, of course, is all of the responsibility and risk is yours too; losses are coming out of your pocket. This also limits the number of people with expertise in your industry who are invested in your success; you can’t put a price on knowledge.
You can get money from your friends and family; this is known as love money. The advantage of this route is the understanding and trust implicit in a loving relationship; your loved ones may know that the business venture won’t work out, but they have faith enough in you to invest in your success. The disadvantages can be just as enormous; if you make business decisions they disagree with, it could shake the foundations of a valuable relationship you’ve gained over years. The second disadvantage is that most folks don’t know a loved one with enough excess cash to fund a whole new business venture; the amount you can get from friends and family will tend to be low.
You can get cash from outside investors in a wide variety of ways. Venture capitalists might take on your project if it’s high-risk, high-reward; domains like information technology and biotech are perennial favorites of these large cash sum investors. Angel investors, who are individuals, often retired from the industry, with sufficient wealth, might also invest in your business. For smaller businesses, incubators will often allow you to use their premises and technology along with other small companies; much like an incubator for chicken eggs, they help you grow as you hatch into a successful enterprise. Each of these investors has pros and cons, but the most important thing to remember is that they will have a say in how your business grows; they’ll want a seat on the board, and they’ll give you guidance and advice on how to run the company. After all, it’s their company too.
An ever-more popular way of funding a business is through crowdfunding services like Kickstarter; these websites allow thousands of people to make micro-investments into your company, usually for products or services down the line. This is a nebulous way of getting investment unless you’re quite confident you have a fan base large enough to meet your goals.
No matter how you get your funding, you want an accountant to help you crunch the numbers and make the most out of the funding. There are tax accountants in Winnipeg; get in touch with one if you’ve got funding coming through!