How to Finance Your Small Business Start Up

It all starts with a good idea, an idea that may have been on your mind for a long time. You have prepared the product, how to launch your service, where to set up your office and how to market your new business. But the obstacle always seems to be money to help you move on. Finding a small business on the ground is a big problem for any small business that may exist. Some new businesses are lending initially because it is a key selling point for the skills and knowledge of the owner, for example, consultants, web designers, PR professionals. Businesses that need to have stock, machinery and equipment and other investments, face the real challenge of getting start-up capital together. So what resources can you turn  to ensure that your business starts out well? Your Money The first port of call! If you have time to work then before you go alone I hope you have a back up money behind you. Whether this is cash in a savings account or shares and unit trusts, this is a good start to your fundraising work. You can focus more on saving money if you have a goal to start your own business for a while. Knowing that you need to save money to get your business off the ground will ensure that you do not waste your future egg on unnecessary things. While the new Plasma TV or DVD Recorder may seem trivial, knowing that you have a business to start in the future will be enough to keep the test book closed! Keep Your Job Some business owners are fortunate that in the early days of the business they can keep a day job while working in the business evenings and weekends. This has two advantages. First, they are still earning thus allowing more time to build savings. Second, it is an opportunity to test the business to see if there is a market. Make sure you can keep both balls in the air at the same time otherwise you will end up doing justice to your new job or business. The support of your family is also important if you are to follow this strategy. They should accept that what used to be ‘family time’ may require you to take a back seat until you decide to focus on business full time. Family and friends This can be a useful financial resource for any startup. If you have a desire to run your business for a long time, it means that most of your family and friends already know your idea. So you have to have an indication of who is representing you and who is against you. If you have never shared your secret wish it is time to cheat a little! When you are in the first stage of planning start by tapping to share your ideas with important people who you think can support you. Share your ideas, share your wishes and goals and keep up-to-date with your progress. The plan is to get them sold to you and your future business early. Once you are there you are ready to start soliciting donations and hold an Investor Evening. Prepare a presentation that outlines your plans, business, market, etc. Show potential investors what their rewards will be if you are honored with your support. Invite as many people as possible and promise a happy and enjoyable evening, Be brave at first; tell them exactly why they are there, so that there will be no disagreements. After making your presentation, gather all the names of people who might be in need of additional information or even one person with you. Although this group is people who know and may trust you, don't forget that you are building a very different relationship that can turn sour. Be prepared for stone times! Bank or Loan Credit Line Now you are getting into serious issues! Obtaining support from the Bank for a new business is difficult, as many business people will testify. Another tricky way to apply for unsecured loans while you are still working. If you plan carefully you will know when to start, so a few months before you pack your work, apply for a loan based on your income. However, make sure you can afford the payments comfortably. There is no time for grace; you will be expected to pay immediately, so your business will need to start earning very quickly. The exception is the credit line business plan. There is no set date for payment, although it will be from 6 to 12 months, and all you have to do is make sure you keep within the limit of overdraft. You will need to write a business plan to present to the Bank that reflects your vision and business. Loan Disbursement or Equity With the rise in house prices over the past few years, most people now have greater equity in their homes. Another cheaper alternative to a Bank overdraft or mortgage loan. Interest rates are low and, as payments are spread over a long period of time, monthly payments are low (although you will end up paying extra interest over time). The downside to earning money this way is that your home may be at risk. If meeting monthly payments depends on what the business can produce, a slow start can cause financial problems. So make sure you can meet your payments even in the shortest possible time. Credit Cards If you do not have money to save, you cannot get support from family or friends, or a bank loan or mortgage, there are your credit cards! However, while it is easy to draw on your card, be careful! Credit cards are a very expensive form of credit. They are good because you can afford to pay a small amount but a credit card, as many people have seen, can be a long-term burden. But, if you need a lump sum to start a business and you know you can afford it