So, you want to start your own business?
That’s fantastic and it can be very rewarding to do so. However, whilst optimism and positivism are both important, it’s worth keeping in mind the harsh fact that very large numbers of start-up businesses fail within the first 1-2 years of their initial launch – often for finance related reasons.
Below you will find a few tips that just might help you avoid some of the more obvious pitfalls and joining the ranks of those with shattered dreams.
Have a vision and a plan
Every single successful business there has ever been has started off with two things:
- a vision of what the business is trying to do and what makes the idea either radically new or different to everybody else currently operating in the same or similar domains;
- a plan of how it is going to get from being an initial blue-sky concept to an up and running profitable business.
The latter of the two things above is called a business plan and it is essential to avoid a business being launched on the basis of a pipe dream alone. If you are struggling to construct a plan as to how you are going to make it happen, then it may indicate you even need help with planning or that perhaps your basic idea is not viable.
Incorporate a finance plan into your business plan
The vast majority of businesses need financing to help them get from being an initial idea to real business operational status.
Your business plan is to make clear how much you will need, when and for how long – before you will be able to approach business lenders for appropriate funding.
You have a number of options you can progress for business funding including the banks and specialist small business loan providers such as Everline. However, some lenders may only advance funds if you have at least a couple of years’ or more accounts to support your application.
You may therefore need to consider finding specialist business start-up loans from some banks or perhaps venture capital specialists.
Build in an allowance for your own living costs
It is amazing how many business plans fail to take into account how much the owner will need to take out of the business each month in order to meet their standard outgoings such as mortgages and food bills etc.
Avoid this and make sure that your plan shows that your business will be able to generate sufficient funds for you to live on while it is growing and developing.
Get your plans objectively reviewed before asking for finance
The worst possible time to identify holes in your reasoning or errors in your figures is when a potential lender is pointing them out to you. So, get everything thoroughly checked by someone like a qualified accountant before starting to hand your plan out to support loan applications.
Be strong on figures
People considering lending you money in the early stages may be impressed by your radical ideas and your enthusiasm but ultimately they will get worried if you appear to be weak on the basic metrics of your financial case.
So, learn about the techniques and terminology associated with business finance before entering into loan discussions. If figures are just not your thing, get someone good with them to present your loan request with you.