But if you havent got a rainy day fund or a winning lottery ticket, where do you get the funds to get you started Here are five options that may just help you get the finance to get you going:
The three fs: friends, familyAnd fools
It can be tricky to mix business with pleasure but the government initiative EIS makes investing in start-ups much more appealing. When looking at your 3 Fs think of the ones with deepest pockets as they are most likely to have large tax liabilities which they would be glad to offset.
Of course your proposal needs make sound business sense but the risks are reduced significantly as much of the investment can be reclaimed through tax offsets. The EIS scheme sets out a number of qualifying criteria, eligible companies can then raise up 250k under EIS.
Business angel networks
If you have struck out of luck with your three Fs you might need to look outside of your network. Angel investors typically invest in early stage businesses (often under EIS) and offer not only money but support/ mentoring and access to their address book.
There are numerous angel networks who group together in their investments. Many Universities have angel networks associated with them and in most cases it is not essential that you studied at the institution but expect vetting and pitching rounds.
Accelerators and incubators
With the rise in awareness and acceptance of entrepreneurship in recent years, the UK now has a healthy ecosystem of accelerators and incubators. Such programs fast track your development by offering you funding, expertise and normally office space in return for equity.
Their aim is usually to accelerate your growth to a position whereby, at the end of the program (usually between 6 9 months), you are ready to raise big meaning anything from 250k+.
Competitions Major blue chips within sectors
Blue chips are realising the importance of innovation and are looking to start-ups to provide such development, instead of undertaking cultural shifts to change their entrenched ways of working. I would suggest looking at the major players within your industry to see if they run pitch or business idea competitions with cash prizes.
The Start Up Loans Company
The Start Up Loans Company is government funded initiative, supported by Chairman James Caan, which aims to encourage entrepreneurial growth in the UK by providing repayable loans.
This is a personal debt and should therefore not be taken lightly but can be a great way of getting some small pre seed funding (average loan size 6k). Start Up Loans are administered from a number of organisations with mentorship and support provided alongside the loan, in addition your business case is developed with the partners and requires no big pitches.
Samantha Lott is an alumni of the New Entrepreneurs Foundation and co-founder of The Little Birdie Company, which recently launched BirdieList.com