GUIDE
Funding
By: Kevin Gaskell
Posted on Fri Sep 15 2023
Get funding started
Every new business needs some funding when getting started. How much you need will depend on the type of business you are starting. Some companies can thrive from £250 and other may need £250,000. Depending on how much you need will determine the sources you go to for money.
They key in the beginning is to run the business as lean as possible. It is helpful to remember that any money you borrow will eventually have to be paid back, usually with interest or in exchange for a part of your company.
Friends and Family
The first people you should approach are the ones you can trust – friends and family. Do have a written agreement if this happens, hopefully borrowing from family and friends won’t have negative repercussions, but it is best to keep a record of loans just in case.
Start Up Loans
Start Up Loans is an aid produced by the government to help those starting their own business, you will also be assigned a mentor who can give you help during your business start-up.
Crowdfunding
Crowdfunding can fund your business by raising small amounts of money from a large number of people, it is becoming a popular way of securing funds. There are three types of this:
Reward
Crowdfunding can fund your business by raising small amounts of money from a large number of people, it is becoming a popular way of securing funds. There are three types of this:
Reward
This is a process whereby people fund your business in exchange for incentives.
Equity
This is where people can make an investment into your business in exchange for equity. For example, a percentage of your business. However, you can only sell the share once so be careful when you do this.
Loan
This is where a sum of money is borrowed to be paid with interest. Interest rates can go up as well as down.
Investors:
Professional investors and venture capitalists can help businesses looking to grow by helping them raise funding or development capital. Considering this may be useful to you later in the process of your business venture. There are various funds and investors who will support good ideas. The government has made it financially accessible for investors to invest through the Seed Enterprise Investment Scheme (SEIS) which allows individuals income tax relief of 50% and exclusion from capital gains tax (CGT) on any proceeds of sale of a SEIS investment.
Websites that may help you:
www.businessfinanceforyou.co.uk
Angel Investors:
Kevin Gaskell is experienced angel investor and entrepreneur. He believes that individuals who are prepared to invest significant sums of their own money in new businesses are called angel investors. They will help a start up to grow in exchange for shares or part ownership of the company. They typically look for a fresh idea or new approach to a market opportunity, but one of the most important criteria to attract Angel involvement is the quality and passion of the entrepreneur who is starting the business. Angels will support individuals who know their stuff and have a plan to build something special.
Websites that may be useful for you:
The Basics of Finance:
The initial thought to have when starting a business is that what you are earning should be higher than outgoings. Earnings are otherwise known as revenue, turnover, or income and this should always be larger than outgoings, overheads, or costs.
Incoming:
Income is what you earn from selling your product or service.
Outgoings:
Salary: what sum of money is available to pay yourself?
Property: having a business start-up at home can safe your money
Raw materials and equipment: what materials do you need in order to promote your product? What equipment do you need to make your product?
Insurance: make sure your insurance suits you and covers you from the start