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Business Finance

Jan 15, 2008
If you have this great idea you think has the ability to make money but also make you a successful business person then why not make it a reality. Well one of the biggest problems with making it a reality is usually financial backing. Not everyone has the finance available there and then to make their dream a reality and many give up on their dream because they think they have no chance of getting the finance they require. If you're thinking that's me then I think you need to continue reading this article!

You will need finance for purchasing equipment whatever it may be from computers to ovens, a place of work if necessary if you intend to employ staff you will need an office, factory or warehouse to hold stock if there is any. Once your business is up and running you will need money to pay staff, pay bills and keep the business running as well as promoting the business to your targeted audience.

Finding the finance you require can be one of the most difficult aspects of setting your business up but it can be made simpler if you plan your new business set-up and future using a Business Plan. A business plan will allow you to record all your ideas; you plan for the future all the goals you intend to set yourself and your business. The business plan will set out your businesses objectives clearly and thoroughly, allowing you to go and back and remember them as well as showing potential finance partners to understand fully what your business is about and how you want it to succeed.

The financial options available to new businesses are that of:

* Family and Friends
* Your Savings
* Credit Cards
* Bank Loans
* Business Angels
* Venture Capitalists
* Government Support and Grants

If you don't have savings like many people don't and your family and friends can't help, you have the option of using your credit card but this can be dangerous and most credit cards have a limit of 5,000.

Bank loans can offer a certain amount of money as well as using your account overdraft if available but you have to remember you will pay interest back and if you can't show the bank a credible business plan, that you're good at working in business and have evidence for this, that you yourself can invest some money into the business as well as offering security on the money lent to you using your personal assets as a guarantee.

If the bank turns you down, you may have the option of a loan for small businesses called 'Small Firms Loan Guarantee (SFLG)'. This provides lenders with a government guarantee against default in some circumstances. This is ventured by the Department for Business, the Enterprise and Regulatory Reform (BERR) and other lenders.

Business Angels and Venture Capitalists are similar in many ways they both offer finance to new or struggling businesses which they think will succeed with their financial help, they both take a share of the business and they usually offer around 10,000 to a business. This figure can be a lot more if angels or capitalists group together and become a network or syndicate. Business Angels usually give you the finance you require and let you run the business on a day-to-day basis and watch their money financial investment increase gradually whereas Venture Capitalists usually like to take an active role in decisions being made and like to become a director or part of management of the business.

Whatever finance you require to set your business up, make sure you have a well planned and thorough business plan in hand when you make any financial decisions as well as approaching potential financial investors from family to friends to the bank to business angels.
About the Author
Jene Pedder is the Webmaster of Angel Start-Ups who specialise in offering help finding appropriate Business Finance.
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