Crowdfunding VS Bootstrapping: What’s Right For Your Business?

If you’re starting a business but can’t see how you can possibly afford to fund it, what do you do? There are several options open to you. Some start-ups apply for a bank loan or seek investors. However, these ways of funding your business can be hard to attain, especially if you don’t have a track record of running businesses. Easier options for your company might be crowdfunding, or doing without any extra funding by bootstrapping your way to success.

funding

In order to help you choose the right option for your business, here are some pros and cons of the crowdfunding and bootstrapping methods:

Bootstrap your business

Pros

  • You are entirely in control of your business – what you decide goes!
  • Funding a business with your own money is great for focusing the mind for success. You don’t want to lose your investment.
  • It’s easier to make fast decisions and changes in your company as you don’t have to run it by anyone else first.
  • You’ll have more time to spend on the business as you won’t be involving others.

Cons

  • You’ll have to sacrifice anything that is not absolutely necessary – no plush office!
  • A lack of funding can limit what you can achieve, as you will have fewer resources.
  • It is entirely down to you whether or not your business succeeds or fails.
  • You are assuming all of the financial risk by putting your own money into this venture. Can you afford to lose that money?

Crowdfund your company

Pros

  • Funding means that your business can grow a lot faster and you can even afford to hire other people.
  • By creating a campaign and driving publicity for it, your business will have a head-start in marketing by already being in people’s awareness.
  • You may attract bigger investors who like your idea and have previous business experience you can call on.
  • More funding undoubtedly creates more opportunities for your business.

Cons

  • It can be hard to generate enough publicity and interest to attain your funding goals.
  • You will have to answer to and update those who have funded you. You will have to deliver on any promises made.
  • It is time consuming to raise the capital and it can also be costly. There’s also a chance you won’t hit your target!
  • You will have to be able to justify exactly how you are going to spend the money you’ll receive, which takes time and planning. Get it wrong and you might not have enough money to achieve your goals.

Take the first steps by forming your company!

Whether you decide to opt for outside funding, or give bootstrapping a go, one of the first steps to achieving your business dreams is to form your company. Your business can be formed and ready to go in 3-5 working hours, leaving you free to take care of more important tasks. Find out more about our easy to use, online company formation service here: https://blog.eformations.co.uk/prices-packages/

Need a helping hand in your business?

Here at eformations we offer many services for businesses. From business accounting, to a first class business address service, and online company formation, we’re here to help your company succeed. View all of our services and form your company today by visiting our website. Alternatively, if you have any questions, feel free to call us for a friendly chat on 020 8232 5479.

 

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