Starting a new business is hard work. It takes commitment, energy, imagination and money. You might have the first three, but sometimes the finance is the hard bit. There are various ways in which a start up business can finance itself and it is worth doing the research to see which option may be best for you.
Use Your Own Assets:
Even if some of us do not have that much cash in savings or to hand, we do have possessions or assets which can be used to access funds. If you do not need much to start your business off you might consider selling those old bits and pieces you do not use from around the house, paintings, jewellery that is never worn, sometimes the value of these things can add up and give us a nice lump sum to invest in something. Alternatively, you could consider downsizing you car or house, or perhaps selling your car and leasing one instead. You can even use your property as collateral to gain finances, however, take advice and be very careful about this as if things go wrong the bank or company you used the house as collateral for is within its rights to take it from you.
Get Someone to Invest In You:
It is always worth asking friends and family if they are willing to invest in your business idea. You might be surprised by the support that you get. Just beware of potential fallout if things go wrong as it is more personal than if you took out a business loan and things can get unpleasant sometimes. It is also possible to get what is called Venture Capital if your idea is something that other entrepreneurs might find appealing. This is not a loan, it is someone investing in your business and they will usually expect to be part of the decision making process and will demand a stake in the business, so you must be willing to give these things up.
Alternatively, there is the more standard practice of taking out a Business Loan. However, these are hard to get these days and are more suited to businesses which are undergoing expansion rather than new start businesses. Take a well thought out business plan with you if you are considering going this route.
Use Other Companies to Support Your Business:
A lot of companies rely on things like Trade Credit to keep their cash flow going. This works on the principle of trust and is basically your suppliers trusting you to pay your bill within a certain period of time rather than demanding cash on delivery. This is quite hard to get when you are first starting out and may take some legwork and commitment on your part in order to establish a relationship with your suppliers. But once you have trade credit in place it is well worth it. You might also consider finance factoring. For instance in the case of businesses like Recruitment Agencies who obtain recruitment finance from the likes of http://www.cashsimply.co.uk/improved-cash-flow/ which means that there is no worry about gaps in the cash flow when their clients’ invoices are not paid. These companies take on the responsibility of dealing with payroll so that they do not have to worry if the money is already there.
Go and speak to people about your options. Get as much information as you are able. A high percentage of new start business failures is because the finances where not there in the beginning and there was no working strategy to cover this. Don’t let your business fail because it was not thought through.
Image attributed to FreeDigitalPhotos.net Stuart Miles