To Small Van Courier providing deliveries in Ireland.
To Small fashion importer and exporter
Are you thinking about launching a new business? When you do start a business, there will be periods of time and effort invested into getting things running. It is important that you take time to research your market to make sure customers really want to pay for your product or service. You want to find a niche market or growth area to attract attention to your business. Register your business idea as soon as possible.
Your efforts are dedicated to developing the business idea so that customers not only pay, but they will also tell others about your business. And then, there is the money needed to spend time and effort towards building a business. Most investors concentrate on growth businesses so you will need an innovative product or niche market that will attract attention.
Convincing others to put their money into your business might be easier than you think. Once your confidence matches your efforts, explore different sources of funding that can help you with funding your business. From the government to angel investors, there are ways to get the funding you need for a new enterprise.
You might be able to get initial funding to test and develop your idea through a government support scheme.
A recent announcement by David Cameron during a British enterprise celebration is giving new entrepreneurs a financial start. The government has increased funding to the New Enterprise Allowance and Start-Up Loans Company by £69m. The New Enterprise Allowance will receive £35m and Start-Up Loans will receive £34m with hopes that this major funding boost will spark new business growth.
Small businesses across the country are set to benefit from this additional funding. If you qualify, you can receive financial support while participating in the government’s aim to improve Britain’s economy and create more jobs.
Individuals who need funding and mentoring support to develop business ideas could receive Start-Up Loans. These funds will be rolled out in Scotland and Wales for ex-service personnel and entrepreneurs over 30.
The New Enterprise Allowance has been extended for a further 15 months to help job-seekers who want to start their own ventures. Like Start-Up Loans, financial support and mentoring are available through December 2014.
The cash injection from these two initiatives is predicted to build on the schemes’ past successes. Over the last two years, both schemes have supported the launch of 30,000 UK businesses.
If you do not want to start out with help from the government, another option for funding is to get a bank loan. Once you know that a market exists for your idea, you will need to show the bank: • A realistic cash flow forecast • That you’ll be able to repay the loan with interest
You might need to provide security for the bank loan, like you would for a car or house. This is just in case you do not repay the loan. Think carefully about the risks before giving any personal guarantees to secure the loan. If your business fails, your personal assets could be at stake.
Along with thinking about the risks of a bank loan, consider whether you need to borrow money at all. If you can manage your new enterprise without borrowing money then this is a better strategy. Weigh up profits against risks for taking out a loan. The decision to borrow should have significant benefits that overshadow the risks.
Borrow as much as possible if you do have to borrow money. Underestimating the requirements for running a business is a primary mistake that most entrepreneurs make. It is easier to keep the money and pay it back than to try and borrow more at a later date.
Along with the usual funding options, you can also consider some nonconventional ways to raise enough money to get your new enterprise up and running.
Angel investors usually give more favourable loan terms than bank lenders because their investment is in the person. The viability of the business idea is secondary. An angel investor could be family or friends or someone else.
Therefore, you will need to make a strong case for long-term business growth. With a bank loan, you would need to show how your business can be profitable sooner rather than later.
You might want to raise money to fund a growth plan if you need more investment for an existing business. Selling shares to family and friends is a good option for this purpose. However, if family and friends do not generate enough, you can also look at different sources of equity funding.
One source is wealthy individuals looking to invest in start-up businesses, known as business angels. Another source is venture capitalists, or private equity companies, that look for businesses with a potential to grow quickly. Venture capitalists will invest large sums of money if your business meets their criteria.
There is more than money to consider when looking for ways to fund your new enterprise. One source might lend you large sums of money, but you get nothing else with the deal. Another investor source could offer more than a loan by contributing to the growth of your business. Added value is just as important as cash.
Getting a grant for your enterprise can be a time-consuming task. Many grants are allocated by postcode. Call the local Economic Development Unit, hit the Internet or research local development agencies. Proper research will guarantee that you are not tied to delivering something that is not connected to your business.
Crowdfunding is a new wave of financial support that entrepreneurs can use. Basically, this source of funding involves a large group of people who invest small donations in a business idea. Usually, their investments are made via the Internet. You could become a crowdfunder by setting up a platform for people to use, set your own rates and drive down the costs of financing your business.
There are other things to consider when you are trying to fund a new enterprise. While these are not additional funding sources, they are ways to help strengthen your financial position throughout the life of your business.
For starters, include a ratchet on performance if you strike a deal with an investor. This is an investor protection provision where you receive the benefit of your business outperforming its targets. Without this provision, your investor would reap the excess benefits.
Adopt an organised mindset from the start of your business. Keep a data room of financial history and statistics so you never have to backdate anything for the first investment meeting. Keep accounting books up to date by putting aside an hour each week. This will help you keep financial records organised and ensure the information is timely and accurate.
Preparation also means finding out which insurance you will need. Professional indemnity insurance can protect you from professional negligence claims. Employer liability insurance is legally required if you will employ staff. If your business activities result in the injury of a member of the public, you will need public liability insurance.
If you decide to buy all of the equipment needed for your business outright, spread the cost over a period of time. This will allow those assets, such as a vehicle or machinery, to generate income. This simple practice could make asset finance available while taking strain off cash reserves.
Do not rely on using overdraft extensions as a cash-flow management tactic. Being reliant on bank credit is risky business with a decrease in bank lending. If you have to use overdrafts, only do so for an interim period when funds are low.
Never forget to make people pay. It is easy to raise an invoice, but much harder to collect money from the same invoice.
Some of the tasks you need can be outsourced to freelancers, especially in the beginning. Recruiting permanent employees can be very expensive. You can save money and minimise the cost of office space by outsourcing.
The thrill of starting a new business can wear off quickly if you run out of capital too soon. Your best approach is to connect with the right sources from the beginning. With a viable business idea and the right amount of ingenuity, your new enterprise can get good financial backing.