Small Business Plans, Financing Your Business
A solid financial base is important if you are setting up a new Small Business.
The right financing package will guide you through any temporary difficulties, but you can most growth opportunities when they arise.
This briefing focuses on four areas:
* Decide how much money you need for your small business.
* Investment financing.
* Various forms of borrowing.
* Other sources of help.
1st How much do you need?
1.1 Creation of a budget based on your business plans .
* The budget shows your forecast revenue, expenditure and, most importantly, cash position for each month.
* The forecasts must be realistic. Inexperienced business people will always make over-optimistic forecasts. The turnover to be lower and later than expected, takes longer and paid the costs are higher.
1.2 determine how much funding you need and when you need it.
* A start-up small business may use more than it deserves to two or three years. The level of funding is required, you can up to this point.
* Many companies have seasonal patterns, sales to predictable cash flow ups and downs. For example, a toy manufacturer is facing severe raw material costs in the summer of a large stock of toys - but not receive cash from the sale until after Christmas.
1.3 Let for some contingency funding. How much additional funding could you need?
* Consider worst-case scenarios help you decide how much funding should be available. What happens if a product launch is delayed, you lose your best customers, costs or excess interest rise?
* What exactly is your prognosis? If you are unsure, you may need to set up contingency substantial financial resources.
1.4 Small businesss plans to arrange all of your funding. Even if you do not need all the money at once, not wait until your need for additional funding is urgent.
* For example, bond-£ 20,000 in January and then ask for £ 20,000 more in April May alarm your bank manager. Let the bank know the total amount in the first place - even if you ask to borrow it in stages.
2nd Investment financing
will be difficult to borrow money from a bank, unless you can be an adequate financial base of money invested in the small business business.
Some 2.1 are generally be your own capital.
* You may have cash you have saved or investments you can sell.
* Given a mortgage on personal property, then the money lending to the economy, can pay off. Mortgage rates are below small business business lending rates, there is no agreement fees and some lenders will advance up to 95 percent of a personal property value. Some mortgages have flexible repayment arrangements, which can help reduce the risk of default.
2.2 You can rely on family and friends, are prepared to invest in your company.
* Make it clear that they should invest only amounts they can afford to lose.
* Show them your business plan and give them time to think about it.
* Discuss various what-if scenarios. For example, what if you go bust or do you want to pay a great reward or to expand or relocate, or the risks or hire purchase staff?
* Insert the terms of an agreement in writing.
2.3 May your company attract outside investors.
* You can hardly interest of outside investors, unless you can show a strong balance sheet and a credible small business plans.
* Investors - the purchase, involvement in the business world - expect to be offered high potential returns as compensation for the risk they take. The British Private Equity and Venture Capital Association (BVCA) offers useful free publications, consulting in the search for private investors and venture capital companies. Another good source of information on venture capital financing, the British Business Angels Association (020 7089 2305).
* If you use a broker to find private investors, you should expect to pay £ 50 to £ 350 plus fees as a percentage of money collected.
* State-based regional venture capital fund to invest up to £ 500000 in the English language. Check with your local regional development agency for details of their scheme.
* Most venture capital firms invest no less than £ 1 million because of high costs for the investigation of investment opportunities in small business.
