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The costs associated with setting your business up can rise very quickly and you will have to budget for the things you haven’t yet thought of that will come along. There are costs for everything from incorporation to websites, stationary and the physical equipment needed. It’s a good idea to add a percentage on to what you estimate your startup costs to be, depending on your business sector.

There are various ways that you can finance your new venture, with different pro’s and cons. Below is a list of some of the ways you can access funding and get your idea off the ground.

Capital Investment

If you have money of your own, or have another business with cash in the bank, then it is a wise choice to use it as an injection into your business to allow you to startup. This could be used for anything or just as a working cash flow while you get to a point where you are bringing regular business in.

Pros

  • No interest to pay back like you would with a loan
  • It can be used for any purpose, unlike some grants which specify how the money must be used
  • You can inject this in as a loan to the business from you personally, meaning you can transfer this back when your business is successful

Cons

  • Risk – It is your own money and you could lose it if things don’t work out

 

Outside Investment

Investors can be a great resource in gaining finance to start-up. You pitch your idea to one or more people with money who are looking to back the next best idea, so that they may profit from it. There are many services, both online and through private entities offering this kind of investment.

Pros

  • Large pools of money can be invested into your business quickly, ensuring that you have everything you need to start and survive from the beginning.
  • It can be used for any purpose usually
  • It can sometimes come with a support package and or the experience of the investor to help with difficult business decisions or opening doors to market.

Cons

  • You will most likely (depending on the terms of the investment agreement) have to give a percentage of your business or profits.
  • You may be accountable or have to answer to your investors and they may want to get involved in your operations unless you set this out as a “no no” from the start.
  • It can be difficult to buy out of if you become very successful and want to gain back total control.

 

Loans

Many Banks, building societies and private bodies offer business loans to small and medium sized businesses. Some of these can be available on start-up and are usually granted after a successful pitch of your business plan which will show how you can repay what you borrow. Repayments are usually on a fixed monthly basis.

Pros

  • You can borrow a large amount of money over a long repayment schedule
  • It can be used for any purpose
  • You can get the money quickly in most cases

Cons

  • Interest – You will have to pay an annual percentage of what you borrow back as an additional interest payment. This will be spread over your monthly repayments.
  • If you struggle to repay on time, you may incur late payment fees, or worse have assets or closure in order to repay what you owe.

 

Crowdfunding

When 2 young brewery entrepreneurs couldn’t get the £40,000.00 they needed from the bank, they turned to an online crowdfunding platform. the concept works by lots of investors putting into your idea with smaller amounts of money until your “goal” amount is reached. They will get a share of the profits or a special perk / product for supporting you and getting your project off the ground.

Pros

  • A loyal following of fans / customers before you have even started as they are invested already in your idea
  • It can be used in some cases as it comes in, smaller targeted amounts for example
  • publicity for your startup

Cons

  • It can take a while to reach the total of your startup amount needed.
  • You may have to put out products or services to your crowd-funders, without getting revenue back for it.

 

We can help by working on your behalf with selected funding partners or help with submissions to gain funding.

Give us a call on 01698 833296 to speak to one of our dedicated advisers.

 

Help From Blue!

We can help by working on your behalf with selected funding partners or help with submissions to gain funding.

Give us a call on 01698 833296 to speak to one of our dedicated advisers.


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