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All new businesses require capital, i.e. money to start up, and sometimes quite substantial amounts of money, depending on resources required. Money is needed to cover basic business costs, including business equipment, a workplace, marketing tools, staff and utility bills. Most, if not all of these things need to be covered before any money starts coming in. So, JobZoo have created a list of advice for funding your new start-up business
After completing a business plan, the financial forecast should be clear, as well as how much money will be required both for initial start-up costs and the running of the business. A good business plan will not only make understanding the finances easier, but will also help to raise capital by impressing or seducing investors.
It is also vital to remember living expenses required whilst starting a business:
"How will I be able to pay my rent? What will I do to afford food? How long will it be until I make money for myself?"
When starting a business from scratch, it is unlikely for people to have enough money to support themselves at first. These are important factors to consider when working out how much money is required.
Raising money for starting a business can be difficult, especially in a post-recession climate. However, there are many finance options available, and each comes with pros and cons that need to be considered carefully.
Depending on the size and scale of a new business, it may be possible to get it off the ground with personal funds. However, in most cases, using personal savings will not be enough to use alone.
Using personal savings may give far more control over the running of the business, and requires no repayment, but it can be risky. Especially if borrowing from family and friends, it is important that all investing understand these risks and the possibility of losing money.
If using personal savings or borrowing from family or friends, business starters must make sure that the financial forecast is accurate and that all potential costs have been considered.
With a credible business plan, it is possible to borrow money from banks and building societies. Banks can offer short and long-term finance in the form of loans and business overdrafts. Opening a business account with a bank can also mean receiving ongoing support and advice from professionals.
Most banks and building societies can be approached via their high street branches, and there is often the option to speak to a financial advisor before making any decisions.
Building societies and insurance companies will sometimes offer business mortgages or loans in return for the same level of security. It is important to always think carefully before borrowing money, and seek advice where possible.
If it is proving difficult to receive funding from banks and building societies, there are still a number of ways to get investment from external sources. These companies can include:
The government has a range of funding opportunities for small or start-up businesses that need the financial help to succeed. This help can range from simple loans to grants and equities, using a range of government-run business solutions. It is in the best interests for the government to push enterprise, so they are always keen to hear new fresh ideas.
Competition for government grants is fierce, and they still require a well thought out business plan, with realistic ideas and goals.