Posts Tagged ‘new business ideas’

5 Tips On How To Get Funding For A Small Business

Tuesday, July 3rd, 2012

More than 500,000 people in the U.K alone Start a Business every year.

World wide the amount of people starting a business runs into the millions and is growing by the day. Everyone has a different reason for wanting to start their own business including:

Being a natural entrepreneur who has a product or idea to sell to the masses
An individual wanting to become their own boss
Someone wanting to have more flexibility
Someone being forced to start a business due to becoming unemployed.

However, regardless of what type of business they start, most people will need to get funding to get their small business off the ground. Knowing where to get money from to start your small business can often be the hardest part.

Below are 5 tips on the best ways to get small business funding:

1. Have A Good Business Plan

One of the most important things to have in place before applying for finance is a strong business plan. A good business plan should be no longer than 10 pages of A4 and should include:

The product or services that you are going to provide
The cost to make or buy that product
The operational costs including rent, staff, fuel, vehicles, stationary, materials, legal fees advertising etc.
The location of the business
Who your targeted customers are going to be.

Most lenders say that when reading a business plan they are looking for good cash flow management, a strong balance sheet, a sound business plan and signs that the company is looking to develop and grow.

It is also important to calculate the exact amount of money that you want to borrow before hand as potential lenders do not favour people who ask broadly for some working capital without having worked out the actual sum of money that they require.

Lenders like to be clear about why you want to borrow the money and how you are going to pay it back.

2. Check If There Are Any Strings Attached

When borrowing money from a lender, make sure that you have any legal documentation checked to ensure that is complies with the Financial Services And Markets Act 2000.

Before entering into a financial agreement with any company, it is advisable to make sure that there are no strings attached. It is important to read all the small print and to be clear that you are 100% certain of any conditions that are attached to your loan. For example:

Are you bound by a personal guarantee for the loan?
What will the interest rates be?
How much are the application and transaction fees?
What will the renewal fees for the loan be, in case you will want to extend the loan
Are there any penalty fees?.

3. Be Yourself / Don’t Keep Secrets

When applying for funding for a small business it is important to be yourself. Prospective lenders will be assessing you as a person when they consider whether to lend you money. If you are trying to be something that you are not you will not come across very well. It is important to be confident but not overconfident. Be natural, as you will be ultimately trying to build up a relationship of trust.

It is also important to be open and honest about your financial background, as all potential lenders will check your financial history. Failure to disclose any previous debt will not only result in delaying the process but could also result in you being declined the loan. It is better to be upfront and honest from the beginning.

4. Look For an Investor

If possible try to offer to invest some finance yourself into starting your business, as it will show a commitment on your part too. If however you cannot find the money to invest into your company and you fail to get the required amount from a lender, you could consider asking an investor to Invest into your small business.

Investors who invest money into a small businesses, are often referred to as a “business angel”. Business angels act either independently or as part of a syndicate and have usually been successful business owners themselves. Some will solely lend the money whereas others prefer to take a more active role in the business, often taking a seat on the board. Business angels lend money on the basis that they take part ownership or a share of the business profits.

Business angels can be useful for providing capital for business start ups, offering valuable advice and also for the network of business contacts that they acquired over the years which can prove invaluable when starting your own business.

5. Check Out New Business Grants

Despite the current economic doom and gloom, there has never been a better time to start a small business. In order to encourage individuals to start a small business the government are now offering various small business grants to help get businesses started.

Below are examples of some grants currently available:

Enterprise Finance Guarantee (EFG)
Launched in 2009 and available until 2014-2015 the EFG is a loan guarantee scheme to help create additional bank lending to U.K. based small to medium businesses that are viable and lack security to obtain a commercial loan.
Provided that the business can repay the loan the government offers a guarantee for 75% of the loan. This is available for businesses with an annual turnover of up to £44m that require loans of between £1000 -£1 million and is repayable over a period of between 3 months and 10 years.

Regional Growth Fund (RGF)
This is a government fund amounting to £1.4b that operates across England from 2011-2014. The RGF is to support projects and programmes in areas and communities that are currently dependant on the public sector. Rounds 1 and 2 of bidding have now closed and is it not yet known when round 3 will open for suitable applicants to bid for a share of the remaining funds.

European Regional Development Fund (ERDF)
In England the ERDF is managed by the Department for Communities and Local Government. Around £3.2 bn of funding has been allocated to help various incentives between 2007 to 2013. It is designed to boost regional economies and can be applied for by contacting your regional ERDF programme team.

Export Enterprise Finance Guarantee (ExEFG)
The ExEFG has been designed to provide short term (up to two years) export finance to small to medium businesses that are viable and lack the security to export finance commercially. It is available to businesses with a yearly turnover of up to £25m who are looking for a short term export finance of between £25,001 and £1m. The government will then guarantee lenders 60% of each facility and the borrower will pay a premium.

Regional development Programme for England (RDPE)
The role of the RDPE is to help to develop rural businesses and to build thriving rural communities. There are various grants available under the scheme which is jointly funded by Defra and the European Union and runs from 2007 to 2013. There are also other government grants available for small to medium businesses in Wales and Scotland that are funded by the Welsh and Scottish Assemblies. There are no guarantees to succeeding when starting a small business. Sadly many small businesses fail in the first year. However even if you have the best new business ideas in the world , often the hardest part is knowing how to get funding for a small business.

If you struggle to find the funding yourself, it is worth looking into the options of ‘business angels’ or government grants to help you to get your new small business off the ground.

For more advice and information on starting a new business visit www.perfectprosperity.com

Kind Regards
ROY DERRICK

Tags: Business angel, business angels Starting your own business, find money, Funding a small business, Funding for a small business, How to get funding for a small business, new business grants, new business ideas, Small Business, Small business funding, Small business grants, start a small business, Start your small business, Where to get money from
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Getting New Business Ideas Off To A Flying Start

Tuesday, December 20th, 2011

Get Your New Business Off The Ground

Did you know that a rocket uses more than 90% of its fuel to take off? In much the same way it will take 90% of effort on your part to launch any new business ideas that you may have.

With us now facing one of the worst global downturns since the Second World War resulting in higher numbers of people being made redundant or having pay freezes, it is not surprising that more and more people are now considering starting their own business and are thinking hard of find new business ideas

Ironically the opportunities for find a new business idea and starting a successful business in a recession are huge. Indeed, famous companies like Apple, Microsoft and Face Book were all started in a recession.

However, before committing to starting your own business you will need to first of all ask yourself whether you will be suited to becoming your own boss. You will need to research what will be involved with running your own business to see if you have got what it takes to cope with…no guaranteed income, lots of hard work at the beginning, no spare time for family and the stress of controlling your own financial destiny and so on.

If you decide that you have what it takes then the following points will help you to succeed:

Write a business plan
Writing a good business plan can make the difference between your business succeeding or failing. Not only will it detail your objectives and goals but it will also help to convince potential lenders to have the confidence in your idea to lend you money on the strength of your proposals.

Many banks, if they feel confident with your business plans, will sometimes also offer what is known as a facility, which is an amount of money reserved for you that can be taken as and when you want. The advantage of this is that you will then only pay interest on the money that you have actually used which can be a massive help financially when you are starting off in business.

Research Your Business Idea
Carry out thorough research on your business idea. Find out what your competitors are offering and think how you can offer better.
Examine who you think your target audience are? Young, old, the lifestyle they have and why will they want to buy from you rather than your competitors?

Keep start up costs down
Try to keep your business start up costs low in order to keep as much spare cash as possible as a cash flow for your business.
For example do you need to go to the expense of having office premises or could you just as easily run a business from home operating from a spare room in your house?
Talk to H M Revenue and Customs who will be able to offer valuable advice about tax issues that may be able to also help you to save money.

Good Bookkeeping
Make sure that you have a good bookkeeping system .Good bookkeeping can keep track of your business progress from the onset. Make sure that you keep all receipts and invoices, even ones from before setting up your business if they relate to your business.

It is also beneficial to make sure that you monitor your cash flow weekly and that you stick to your budgets.

Make sure that loved ones are “onboard”
Starting a new business can involve working long hours at the beginning with having to make sacrifices along the way. Before you start a business from home make sure that those closest to you are fully aware of what will be involved with your venture…Working long hours especially in the first year, no extra cash for a while and a part of the home becoming an office ,to name but a few.

There will be enough pressure in the first few months of starting a new business, without the stress of falling out with loved ones too.

Let your customers know that you exist
In order to get the all important customers for your business you will need to find the best ways to market your business.
This will be largely dependent on what type of business that you start. If, for example you are starting a plumbing company, advertising in local press or sending out flyers will be an effective form of marketing for your business. Whereas if you are starting an online business you will need to ensure that you have good SEO in order for potential customers to know that you exist and to find your website.

You will need to test various methods of marketing and be prepared to be flexible to change if certain forms of marketing do not work well for your business.

Have an alternative means of income
When starting your own business it is better to work it part time around your current job before taking the step to lose a regular income. This will give you valuable time to test the success of your business idea while making extra money at the same time.

If you have been made unemployed and cannot work around a current job, it is advisable to keep some money aside to cover your outgoings while you are waiting for any business profits. It can take anything between 6-12 months before there will be any profits from your business which will mean needing an alternative means of income for that period of time. Even when you have succeeded to create a profitable business it is better not to take too much income for as long as possible in case your business suffers a temporary slump in sales.

Sadly there is no fool safe way to know how to run your own business, but the most important factors to take into account are to work hard and to allow time for your business to grow. It will not happen overnight but if you carry out thorough research and market your business well and ensure that you stick to your budget and regularly monitor your finances, you will eventually create a successful business.

Just remember actually setting up your business is what will require the most effort and hard work on your part. Once you have put in the effort, like the rocket that successfully completes its mission, you too will reap the rewards from the eventual success of your business.