Today’s blog is the third in our series on starting and making a success of a new Internet of Things (IoT) organisation. We began with a discussion on developing the kernel of a business idea into a concrete plan, along with the skills and applications you might require – click here to read it.
Next, we turned to the questioning of marketing and selling that idea – how best to communicate it to the partners, suppliers and of course, customers, that will power its success – click here to read that blog.
Now, we’re moving on to one of the most important – and, for many new business owners, overwhelming – driving forces of start-up success – the finance. How are you going to fund your new IoT business?
What funding is available for start-ups?
There is a wealth of funding sources available for new businesses – though, admittedly, many of them are complicated to research and apply for. Traditional line of credit routes include bank loans, asset finance, loans from friends and family, and even overdrafts credit cards. Grants are available from the likes of the Prince’s Trust and other organisations that are typically more specialist in terms of sectors or geography. Then there’s the option of getting other entrepreneurs – or even individuals – to invest in your business, through angel investment or crowdfunding.
Fortunately, there is also a wealth of online resources available for you to sort through these options and establish what would work best for you. The government’s own website, as well as www.startups.co.uk, are both good places to begin.
How can you make yourself attractive?
Regardless of which funding source or sources you think is most suitable for your business, the principals of how to make your new IoT business seem like a safe bet for that funding are very similar. Here are our points to consider:
- What’s your stake? It’s still surprising how many new business owners try to seek out loans or angel investment without having saved up personal funds or investigating personal finance options. We’re not suggesting that your stake your family home and all your possessions on your new business – but seeking out some personal finance is still an important way of demonstrating to potential investors that you’re serious, not to mention being a useful funding source in its own right.
- What’s your plan? Banks, grant distributors and individual investors all want the same thing from you – a clear business plan. This means an explanation of why your IoT business idea is special, and what the next year looks like. We’ve blogged about how to approach your business plan – click here to read more.
- What will you spend the money on? Related to the business plan, you need to be able to explain exactly why you need £40,000 rather than £30,000, break down exactly where it will go and why. Of course, you will also need to provide a plan for repaying the loan, or demonstrating the stake an investor will get in your business.
Find someone you trust, get a recommendation, get a lawyer, and get a good accountant. None of these funding systems should be undertaken without a lot of forethought – even financing with a credit card. You need to know what you’re getting into and what risks you’re assuming by taking a certain path.