Being an entrepreneur is more than thinking of potential business ideas – you must be able to make them successful too. If you’re an entrepreneur hoping to kick-start a new venture, you’re going to need to have a handle on the financial side of the business. Whether you’re a small business, or a start-up, knowing where to look for investments to fund your new endeavour is key. Read on to find out more.
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What is Entrepreneurship?
When we talk about entrepreneurship, we are referring to the activity of setting up a business in the hope that it will eventually make a profit. An entrepreneur is an individual behind this business idea that then looks for ways in which they can make it a reality, get it off the ground, and develop it into a success.
There are 4 types of entrepreneurship which are:
- Small Business Entrepreneurship: This often refers to people that run their own businesses, like hairdressers, plumbers, or electricians. The money they make goes to feed their family and pay day-to-day expenses. They are usually funded by loans or family and friends.
- Start-up Entrepreneurship: This often starts with an entrepreneur that hopes their vision is about to change the way we live – they attract investors and hire the brightest employees, but this also means they require more capital to back their project.
- Large Company Entrepreneurship: This is used in large companies to create new, innovative products and sell to customers within a new market, the products are usually constructed internally.
- Social Entrepreneurship: This is a product that only works to solve social needs and problems and does not make a profit.
Types of entrepreneur finance
Entrepreneurs rely on various finance options to get their business off the ground, and on the way to becoming successful – there are many ways in which they can do that including making use of subsidies, angel investors and crowdfunding. We’ll look at these options in more detail below.
Angel investors
This type of investing means other entrepreneurs can invest in your company. If they have funds available, they can invest in new companies that they believe in, and think will make a profit. They sometimes invest as part of a group, or they may invest alone. One of the benefits of using an angel investor to get your company started is that they come with a wealth of business knowledge, as well as being able to provide you with contacts through their network. They have sector-specific knowledge so choosing an angel that suits your business is advantageous.
Crowdfunding
This is one of the most well-known ways to finance a new idea or business. It takes place via an online platform in which large groups of people invest various amounts into a business, to meet the number of funds the entrepreneur needs.
There are a few different types of crowdfunding, from loans, pre-orders and donations and convertible loans. If you’re thinking about using crowdfunding as a way of financing your new business venture, it is always best to express your ideas clearly so that they are easily understood. The investors tend to be normal people, so you stand more of a chance of appealing to the public if they understand what you have to offer.
Subsidies
This type of funding is provided by the government or council in a local area if it is in the interest of the public. All you must do is research if there are any subsidies in your area that fit what you need and then apply. It doesn’t matter what stage a company is in, there is likely to be funding to suit all. Don’t be put off by the application and administration process – a subsidy can be a great boost for a new company.
The Founders
This simply means investing in the company yourself – whether that is with an injection of cash, your own time, or items to help the business get started. You can invest in your own company at any time, but it is usually a way to get the business up and running. But what are the advantages of this? If an outside investor sees that you’ve invested your own money in the company, you must think it has a good chance of succeeding – it gives them an added sense of security if they’re thinking about investing in your business.