26 May 2024, 02:39
By Kelly Edwards Mar 15, 2023

Four ways to fund a retail start-up

For many industries, starting a business only requires a laptop and a reliable internet connection. When it comes to furniture retail, however, the need to raise capital is immediate, and essential before you can think about generating a profit – writes interior design and construction specialist Kelly Edwards …

There are many ways to raise funds for your retail start-up, and it’s important to find one that’s right for you. Here’s four ways to raise funds for your company …

Start-up accelerators

If you’re new and unknown in your industry, start-up accelerators are probably one of the most viable options for raising funds for your business. Like venture capitalists, many start-up accelerators are able to pump capital into emerging business ideas in exchange for a share of equity, while offering a much more accessible vetting process compared to traditional routes. 

Start-up accelerators can also provide some great opportunities for networking. As tech start-up accelerator Altar puts it, joining an accelerator platform allows you to “meet not only the other entrepreneurs in your cohort. You also gain access to a network of alumni who have been where you were”.

Angel investors

If you don’t have the right materials to impress venture capitalists, then angel investors can be another great method of raising the start-up funds you need. Unlike VCs, who are tied to an investment firm, angel investors are private individuals with a lot of liquid capital, who finance small businesses in exchange for an agreed amount of equity.

Because angel investors tap into their own net worth instead of an investment fund, they typically won’t be able to offer as much start-up capital as a VC. Furthermore, because they’re taking a relatively high risk, you’ll need to bring a highly developed and impressive business pitch to the table in order to convince them.

However, for the purposes of a fledgling furniture retailer that’s just starting to establish themselves, angel investors can be a great choice for many entrepreneurs.

Equity release remortgaging

Most people will remortgage their property simply because they’re getting to the end of the fixed-rate period set by their lender. However, for cash-strapped entrepreneurs who don’t have much liquid capital, but have great confidence in their business plan, remortgaging can be a quick and easy way to access funds tied up in their homes.

The important thing when taking this course of action is to research the market thoroughly, understand the huge diversity of mortgage products available, and find one that’s right for you. In the words of Pete Mugleston, MD and mortgage advisor at Online Mortgage Advisor: “Searching the entire market before settling on a lender is recommended … as some are better equipped than others to offer remortgages.”

Crowdfunding

Crowdfunding services such as GoFundMe have revolutionised the way entrepreneurs raise capital, democratising the whole process and making it easy for entrepreneurs to build campaigns and reach out to their audience.

Within crowdfunding models, each person who contributes to the campaign acts as a kind of mini-investor, expecting no equity in return. Instead, it’s more common for crowdfunding contributors to get exclusive perks set by the brand. 

For example, if you’re looking to open an artisan furniture retailer, with a calendar of select handcrafted pieces which will sell out fast, you might want to offer contributors in a certain donation bracket exclusive access to pre-order these items.

Though crowdfunding is very low-risk and accessible, it does take a lot of work on your part. Crowdfunding is a highly involved way of raising funds, made for the post-social media age. If you’re not keeping your donors in the loop with interesting content about your store, your campaign won’t get far.

Final thoughts

The retail business has many different points of entry, suited to many different needs. Though these fundraising methods are just the tip of the iceberg, investigating them should help you understand your options and help you find a fundraising strategy that works for you.

Kelly can be reached at [email protected].

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