Start and Grow your own Business
CHECKPOINT 6 ( 6 of 7 ) – Funding for your business..
In recent surveys of startup and pre start up businesses, over 80% of the responses advised that they were looking for some funding … but when we followed up and asked how much they needed or were looking for, most had no idea. ( see our earlier article on Mindset ), people were using the issue of funding as an excuse for not planning or starting a business.
It is important to plan the business first , then look at the funding second… What business are you planning to set up, how much do you want to earn, and then, how much money do you need to start ? Actually work out an amount. If you are not sure seek advice from a Startup specialist.
But, at this early point, you may realise that what you are looking for is not realistic. And this may turn up other issues about the proposed business . Then revise the funding requirement.
An example. We were asked for advice from someone who wanted to set up a fine dining restaurant. On meeting, he advised that his experience was only as a ‘front of house‘ manager in a restaurant. Good job, good experience, but he did not know the business of preparing gourmet food, and that we would be totally at the mercy of the chef… We identified the money that he would need to open such a restaurant ( he had no idea) but also that he did not have the essential experience necessary to own run and manage such an establishment. Our advisor at the Hub had owned restaurants so was able to offer first hand advice . The guy instantly accepted that his plan for the future was unrealistic and subsequently changed his ambition to a bar serving simple menus….and his plan for this business has now progressed So the conversation started about money, but the main issues were otherwise.
More recently, an inventor was looking for £20,000 to manufacture a product, which had never been manufactured or tested. With advice, the project was broken down and an early requirement for £5,000 was identified to get a prototype made, and tested… then funding for the next stage will be sought…
At a workshop last year about starting a food business, many people came forward and advised that they had a recipe ( for a sauce, or juice or a food item ) and needed funds to create a business. Again, a planning / timing issue. Not a money issue up front. Most were advised to start in a small way , making and selling the product… ( a very low cost start ) then take steps to grow in stages. Very few people took the advice, creating a plan, with timescales to grow a business. They used ‘money’ as an excuse for not progressing a business.
So having defined how much you actually need, and there is a realistic business create a plan for the business. Here are the many options for raising money for funding and starting a business.
1. Credit Card
3. Loan – Bank or Finance Company
4. Loan – Family or other source
8. Part time job
9. Part Time Business
10. Self funding / Personal ( from the business )
11. Sell a business
12. One off schemes
13. Crowd Funding – Traditional appproach
14. Crowd funding – Peer to Peer
See the separate blog on the web site on funding, referring to all the above.
FUNDING IS ESSENTIAL
Also a point for consideration. It is almost impossible to promote, and market, a business without some money. A lot of those planning start-ups will assume that they can get a loan or, will get a grant. Forget it !! The number of people planning small startup businesses who actually get grants or start-up loans, is tiny. Find a way to raise some money. Big reminder. When doing the planning, at some point you may realise that the business you are planning is just not viable See the blog in this series on Mindset, and the blog about the funding options included above ( copies of both on the web site )
For all those who are looking for funding or investment of say £20,000 upwards ( whoever you are talking to about loans will ask the same questions and make the same comments ) , listen to what the Dragons say. At their level of financing and above, there are dozens of companies to talk to. Unfortunately you can waste lots of time talking to these companies. It is always good if you can get some advice and direction first. The Dragons’ advice and comments are based on experience. If you are looking for funding for a smaller startup business, contact the Hub or other Start-up organisation.
FREE MARKETING OFFER
Get a review of your business or idea, and the funding required . Receive comments and advice free. . Email the Business Startup Hub ( address below) and ask for a business review form…
Business Start-up and Development Specialist. Has been personally involved in developing dozens of businesses from the sole trader to the corporate. Within the past few years, he has built up and sold two businesses. Currently has 4 businesses, so all experience is current.