Funding options for your company 

• Private investment- when money is invested by companies, financial organizations, or other investors, rather than by the government.

• Grant- amount of money that a government or institution gives to an individual or to an organization for a particular purpose such as education or home improvements.  

• Self finance- using one's own capital to provide funding for a project or company. Self-financing allows the creator of the project/company to maintain control apart from outside

influence. It also allows the project/company to grow without debt.

• Loan- an amount of money that is borrowed, often from a bank, and has to be paid back, usually together with an extra amount of money that you have to pay as a charge for

borrowing

• Donation- something which someone gives to a charity or other organization.

• Sponsorship- supporting an event, activity, person, or organization financially or through the provision of products or services. It is a cash and/or in-kind fee paid to a property

(typically in sports, arts, entertainment or causes) in return for access to the exploitable commercial potential associated with that property.

Private investments have a range of pros and cons. Pros include allow you to choose your own investors (this increases the chances of having investors with similar objectives to you and means they may be able to provide business advice and assistance, as well as funding), allow you to remain a private company (rather than having to go public to raise finance), provide flexibility in the amount and type of funding (e.g. allowing a combination of bonds and equity capital, with amounts ranging from less than £100,000 to several million pounds), allow you to make a return on the investment over a longer time period (as private placement investors will be prepared to be more patient than other investors, such as venture capitalists), require less investment of both money and time than public share flotations and lastly to provide a faster turnaround on raising finance than the venture capital markets or public placements. However, the cons include a reduced market for the bonds or shares in your business, which may have a long-term effect on the value of the business as a whole; a limited number of potential investors, who may not want to invest substantial amounts individually and lastly the need to place the bonds or shares at a substantial discount to compensate investors for their greater risk and longer-term returns.

​

Grants have a range of pros and cons. Pros include free money (the number one advantage of business grants is that they are essentially free money. Grants do not need to be repaid, which is what makes them so appealing for business endeavors. Not only that, but some grants available offer hefty amounts of money, depending on the applicant’s idea), accessible info (there is a lot of information about where, how, when, and who to get grants from. This accessibility is incredibly important, because you’ll have to do a lot of searching to find the right grant for you. No matter what industry you’re getting into, there is tons of information and resources at your fingertips), waterfall effect (once you’ve been awarded one grant, you’re more likely to receive others. Since someone has already given you this free money, other organizations will see you as a reliable candidate.) and lastly gain credibility (not only will getting one grant put you on the path to receiving another, but it will also increase your visibility. Winning some of the most coveted grants can provide benefits that outweigh the simple free money advantage. Grants can also promote your business and idea, showing that your work is of notice.) However, the cons include its time-consuming (you’ll have to do a lot of research and fill out a lot of paperwork if you want to apply for a grant. There are many, but they are all very specific; you’ll have to find out which fits best with your venture. Once you find a grant, the proposal is the most important thing. If your idea or venture is creative, it won’t get you that grant without a convincing proposal), difficult to receive (there are a lot of people who want the free money that grants provide. On average, around 2,700 grant proposals are submitted a day, but less than 200 will get funding. With thousands of small and online businesses out there, many of them are working to receive free money as well. Be prepared for tough competition, but don’t let that inhibit you.), uncertain renewal (one of the peskier disadvantages of grants is that they are not always renewed. Suddenly, you may no longer receive funding. You may have to reapply for grants year after year. Make sure that your business will stay steady if your grant is not renewable) and lastly strings attached (although grants are free money, they still come with plenty of restrictions and conditions. You must be very specific about how you will be using the money when you apply for a grant—once you get the money, you have to stick to that plan. State and local programs will often have a type of contingency plan set up, which means extra work for you.)

​

Self-finance has a range of pros and cons, pros include you will know exactly how much money is available to run your business and you will not have to spend time trying to secure other forms of funding from investors or banks. Self-financing your business gives you much more control than other finance options. It also means that you don't need to pay back or rely on outside investors or lenders, who could decide to withdraw their support at any time. You will retain full ownership of the business, which in turn means that you will receive 100 per cent of future profits. If you fund a business yourself, you will be forced to live within your means, only investing in business equipment and marketing when you need to. This can help you to prioritise your business expenditure and avoid excessive spending. However, the cons include using your own money to finance your business may put a strain on your family and personal life. You may not have enough money left over to cover your living costs. You should try to leave a contingency fund, in case you need extra money to see you through a difficult period. If your business were to fail, you could lose your home and other personal possessions. Many investors and venture capitalists can also provide mentoring and networking opportunities for you and your business - if you fund your business alone, you will have to develop your own contacts and mentoring opportunities.

​

Loans have a range of pros and cons, pros include banks don’t try to influence how the money is spent (unlike investors, a bank is never going to interfere with how your business is run. If you find an investor, you will have to work alongside them. And unless they’re a silent partner, they will expect to have a say in how their money is spent by the business. On the other hand, banks don’t care what you do with the money as long as you’re going to be able to pay it back with added interest. What happens in between now and then is entirely up to you. So, if you want to retain full control over your business and how it grows and expands, a business loan is usually the best option.), they’re convenient/easy to access (it’s easy to get in contact with your bank and talk to them about the possibility of taking out a business loan. This convenience and ease of access is something that can be really good for businesses. Most business owners don’t have time to waste. And waiting for profits to grow in order to reinvest them can take a long time. The same applies to looking for investors. It’s a long process, and it can drag out for a long time. Of course, loan applications can take a long time to be analyzed and accepted, but they are easier to deal with than the majority of the alternative options.), reasonable interest rates (the interest rates attached to most business loans are very good. Banks are competing for customers, so they are obligated to offer a deal which is at least in line with what their competitors are offering. Of course, the interest rates are still going to allow enough room for the banks to see a healthy return on their profits. But the rate you get is often better than most personal loan options. On top of that, the interest you pay is often tax deductible. You will have to check with your local authority to see whether or not this is the case for your business, though.) and lastly the profits will be all yours (most business owners take out a business loan because they want to expand their business or push it in a new direction. This means that they want to make it more profitable. If you get this money from an investor, they will expect a return on any money you make. The performance of the business will be directly linked to how much they get in return. That’s not the case when you take out a loan, though. The returns are fixed, meaning that you will pay the same amount of money back to the bank no matter how big or small your profits become as a result of your investment.). However, the cons include that  not all businesses will qualify for a loan (there are lots of strict rules and conditions that banks have in place when it comes to approving or rejecting business loan applications. Not all businesses will meet the criteria laid out by the banks. So, you will need to know how the banks analyze applications before you go ahead with your application. You don’t want to waste time on an application if there is no chance of it being accepted by a particular bank. Dealing with a rejection can be difficult to bounce back from too. You can be left wondering where you should turn next to get the money your business needs.), they’re often secured against assets (many bank loans are secured against an asset owned by the business. The risk of this is that the asset can be seized by the lender if you fail to make the repayments on the loan you take out. Of course, you will probably think that this won’t become a problem for you. But that’s what everyone says when they take out a secured loan. It only becomes a problem when your business’s profits are not as healthy as you had hoped for and you’re no longer able to make those repayments on time. Think about this carefully before taking out a loan.) and lastly you might not be granted all of the money you requested (another thing banks do when responding to loan applications is only grant some of the money that’s requested. They might think that a business doesn’t need all the money that it is asking to lend. It’s not uncommon for banks to approve a loan on the condition that only 70% or 80% of the money is given. This can be frustrating for business owners who already have fully cost plans in place. It can force them back to the drawing board in an effort to cut costs and find ways to carry out their plans in a way that is more affordable. In truth, it’s a headache many business owners could do without.). 

​

Donations/crowdfunding has a range of pros and cons, pros including it can be a fast way to raise finance with no upfront fees, pitching a project or business through the online platform can be a valuable form of marketing and result in media attention, sharing your idea, you can often get feedback and expert guidance on how to improve it, it is a good way to test the public's reaction to your product/idea (if people are keen to invest it is a good sign that the your idea could work well in the market), investors can track your progress (this may help you to promote your brand through their networks), ideas that may not appeal to conventional investors can often get financed more easily, your investors can often become your most loyal customers through the financing process and lastly it's an alternative finance option if you have struggled to get bank loans or traditional funding. However, the cons include it will not necessarily be an easier process to go through compared to the more traditional ways of raising finance (not all projects that apply to crowdfunding platforms get onto them), when you are on your chosen platform, you need to do a lot of work in building up interest before the project launches (significant resources, money and/or time may be required), if you don't reach your funding target, any finance that has been pledged will usually be returned to your investors and you will receive nothing, failed projects risk damage to the reputation of your business and people who have pledged money to you, if you haven't protected your business idea with a patent or copyright, someone may see it on a crowdfunding site and steal your concept and lastly getting the rewards or returns wrong can mean giving away too much of the business to investors. 

​

Sponsorships has a range of pros and cons including build awareness (the most obvious benefit of sponsoring events, charities or projects is that it builds awareness of your brand, exposing your business to a wider audience and giving them a positive association with your brand. When they’re looking to make purchases in your field, this could help persuade them to choose you over your competition), consolidate expertise (If you choose to sponsor an event or organization that aligns with your business goals and values, it can help position you as an expert in your field. An excellent example of this is our client Capital Space who sponsoring business awards in the areas where they have their business accommodation centers. Not only does this expose their brand to the companies who are nominated for the awards, but it shows their philosophy and motivation to support SMEs and work with them to facilitate their growth, which spreads the message of their Points of Difference from their competitors and supports their brand image) ad lastly an excellent targeting tool (knowing your target market is an important part of your marketing strategy, but once you’ve pinned down who your ideal customer is it can be a challenge to reach them. If you sponsor an aligned charity or event which is likely to attract your ideal clients, it can expose your brand to your target market customer.). However, the cons include potential controversies (it’s important to consider that the actions of any person/brand/event you sponsor will immediately be linked to you. Hopefully you will have already ensured that whoever you sponsor remains responsible and professional; however, sometimes you can run into problems. There are many examples of brands being tarnished by their sponsorship associations.) and lastly no guaranteed returns (as with all marketing strategies, there is no guaranteed return on investment. However, you can take steps to ensure that you get what you consider to be appropriate exposure for your support; this is more than advisable, it is crucial, as otherwise you could end up with no benefits at all.  We had a client who sponsored a local football team, but didn’t agree any terms; it took us months to arrange a photo of the players in the kit so that we could create some PR around the sponsorship – as far as the club were concerned, they didn’t have to deliver anything in return for the cheque.).

​

In conclusion 

Overall, the best funding options I would choose for my business are donations/crowdfunding, grants and self finance because crowdfunding presents a major opportunity for art and cultural projects to receive funding, but also to find popularity and reach success. There are many benefits that crowdfunding brings to the art and cultural projects that go far beyond money. Crowdfunding is a great way for the artists to connect with the local community, but also brings the opportunity for the artists to connect with people on the other side of the globe. Through art and culture projects the campaigners bring people from different cultures together, engage them into a conversation and help different nationalities to get to know each other better and to see different cultures on a deeper level. Due to this fact, crowdfunding of art and cultural projects is recognized to have a tremendous social impact. Crowdfunding helps artists to become well-known, which also brings sustainability for the demand of the artist’s work. Crowdfunding helps artists to get recognized and opens up many doors for future success. Successfully crowdfunded art and cultural projects are a great source of inspiration and motivation for artists and art enthusiasts. Grants are so popular because any funding your business receives doesn’t need to be repaid. As such, you could say that grant money is free money. You also aren’t required to provide shares either, so could receive funding without losing control of your business. In addition, you’ll gain the confidence of knowing that your venture has been publicly endorsed by the scheme’s operator (which could be anyone from a government body, growth hub, industry-specific associate or even a large corporate entity) and use it as a promotional tool. Lastly, self finance; any eligible person can claim tax credits, if you are working over 16 hours per week and getting paid for this work.  In addition, you need to be 16 or over and responsible for a child or disabled, or 25 or over and working 30 hours per week.  You can also get them if you are over 50 and recently started work, depending on the benefits you received before you found employment.  The amount of tax credits you might get depends on your income as well.