Step 12: Funding

When it comes to funding, we’re going to assume you already know how much cash you’re likely to need to set-up and run your business for at least 3 months.

If not, we’re assuming a) you’re loaded and don’t need to worry about that right now, b) so busy setting up your business that you just haven’t got to that bit yet or c) you’re a bit dense. Forgive the straight talking but unless you’re person ‘a’, you’re potentially going to run out of cash, which could mean the end of business.

You’ll probably see a few mentions of this in our ongoing series of ‘how to’ steps, but we’re big fans of setting up new businesses that cost very little or start small – ideally created as part of a ‘side-hustle’ approach which happens alongside the day job.

Starting small means there are fewer costs involved but if your business idea requires a good wedge of upfront costs to set-up and get started, you’re going to need to tap into savings that you use now and pay back to yourself over time (assuming the business works) or get that funding from somewhere else.

Family and friends

Unless you’re really new to this, you will have heard stories about people borrowing from their parents or siblings to get their business off the ground. If this is an option for you, always plan for every outcomes, including planning for the worst. It sounds harsh, but make sure everyone is fully aware of the risks and downsides to investing in a new business. Put everything down on paper, what will be repaid, what interest (if any) you’ll pay and how long you’ll take to pay the amount back (assuming you have to). You should also talk about what happens if things don’t take off as planned.


By this we’re including credit cards and loans. You might be able to borrow some money using these facilities – but unless you have a really strong business plan and can offer some personal guarantee or assets to back up business loans etc, there’s no guarantee you’ll get funding from your bank. But it can’t hurt to ask – they might be able to help in some way. They’re nice like that.


Websites like Kickstarter help businesses (new and existing) raise cash to help them develop and launch exciting new products or services. Unlike other investment routes, you’ve got to convince thousands of people to part ways with cash. Granted that cash amount is a lot less (eg £100 each) so it’s a little easier because investors are less risk averse – but because there are more people involved, there will be a lot more communication needed to potentially thousands of people.

Competition on crowdfunding websites is fierce so you’ll need to do a lot of work when it comes to getting people interested. Take a look for yourself at the existing projects on there now and you’ll see lots of text about backstory, great prototype images, swish videos and even giveaway freebies. Do you have the funds to create that backstory to help sell the dream? Also, be ready for all outcomes – if you spend a lot of time and effort on selling the concept, what happens if you don’t reach your target and you get little or no funding? Don’t gamble with your limited funds and assume you’ll get it all back.

Take a look at the range of websites on offer and do your homework. Be realistic about the number of people that will invest in your project and how much they’ll invest. Again, plan how much you’ll need in terms of funding and map out what to do if you get 0%, 25%, 50% or 75% of that funding.

Finally, if you do go down this route, make sure you deliver when you said you would. There’s nothing more annoying (or damaging) than a start-up that never gets round to actually shipping the new product. I’ve even seen really negative posts on Facebook by friends who have invested in a product then complained because they’ve received something late, something poorly constructed and poorly packaged. Yes, people do complained about packaging (but more on shipping and packaging later).

Third party investors

Getting funding by external investors can be useful but also scary. While they often provide access to lots more cash than otherwise available from other sources like family or friends, that normally comes at the price of harsher terms – as in having to give up larger shares of the business. Depending on how much they invest, they may also ask for a hand in the running of the business, which may not be to everyone’s taste. We’ve all seen the BBC’s Dragons Den and countless examples of investors wanting to be closely involved in decisions and actions. If you go down this route, you’ll need to be very clear on expectations, who controls what and who gets what if things go wrong / belly up.

If you want to find out more about setting up a blog, improving your social media campaigns or how to drive more sales online, get in touch.