Part 2 of this series examines “Funding Options” – This is a vital part of developing your fashion business. Some possible sources include:
✅Personal funds
✅Loans from families and friends
✅Bank loan
✅Grants for small businesses
✅Equity Investment
✅Crowdfunding
✅Bartering your service
🟡If you have personal funds available, you may choose to use some of them to get your business off the ground. Decide on the percentage of your funds that is comfortable for you to invest in your business – don’t go all-in with your savings. Make sure you keep something for a rainy day; entrepreneurship by definition is a risk.
🔵Friends and Families can be a great source of getting your fashion business started. They want to see you succeed and most will be happy to be part of your success. Be sure to leverage them to get you going. You may want to discuss interest rates and terms. Think about drafting a simple, one-page agreement if this is a route you’re taking.
🟤Be very cautious about taking out a bank loan at the early stage of your fashion business. You want to ensure that your energy is focused on growing your business instead of worrying about the repayment of a loan that may attract high-interest rates. If you don’t have collateral, this may be a challenge for you in the startup phase. If you do have assets such as your home or car, be very cautious about putting these up to access a loan. You never want to put your home at risk.
🟠Grants are always a good option. Some donor agencies offer 100% grant funding while some require that you have some skin in the game and may go 70-30 for example. In this instance, they will cover 70% of the cost while you cover 30%. While there may be grants who will give you the funding before your project is complete, most are reimbursable, requiring that you cover the costs upfront then they subsequently reimburse you. Where this is the case, you can use the grant approval as collateral to get loans for the grant’s portion.
To benefit from grants, they are usually some stringent requirements such as business registration, filing of taxes, etc. The benefits are usually quite worth matching the requirements.
🔴The Creative Industry is a billion-dollar one. Many investors may want to get a slice of the pie that can give them a high rate of return on their investment. In return for a stake in your business, consider equity capital from an Angel Investor or Venture Capital firm. Your investor will be in it for the long term. If your business loses money, you don’t have to pay your investor anything. You also get the added benefit of mentorship and guidance from your investor who is likely to have years of entrepreneurial experience.
⚪️Then there is the concept of having several persons invest in your project via crowdfunding in return for small perks. If you have a unique project idea for your fashion business, getting several small donations from those with interests in your project is an option to consider. You can easily set up a campaign on Kickstarter, Go Fund Me, or other such platforms. This takes immense work. Success is possible if you are prepared to invest the time and effort into your plan and execute accordingly.
⚫️As another way of funding your startup, start brainstorming all the skills you currently have. Examine all the persons who may need such skills and identify someone whom you could approach to barter your service in return for well-needed funds.
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