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Lack of planning holding back London's entrepreneurs

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Figures released by Business Link for London reveal that 68% of budding entrepreneurs across London believe they do not require a business plan to raise funding.

The survey highlights that the Capital's potential business owners are ill prepared when it comes to financing their business ideas, resulting in 80% of attempts ending in failure. As such, 49% of business owners believe it is difficult to raise business funding for local companies, but 41% were still confident they would secure finance for a business venture.

The study surveyed 265 new business owners across London about their thoughts towards obtaining funding for business ideas.

Key findings indicate:

• Budding business ideas - 88% believe the type of business idea would have no affect on a request for finance

• Past experience not necessary - 91% think experience in a industry is not a issue for investors

• We are family - 20% will turn to friends and family to help raise funds if they are refused a bank loan, while 12% will try another bank and only 10% will try another type of lender

Speaking on the survey's findings, David Sullivan, Financial Relationships Manager at Business Link for London said, "London is full of people just starting out in business or looking to expand. The problem for many is turning their idea into a realistic business plan that financial institutions will invest in. As the survey shows many do not know what they need to think about or where to start. This is where services like Business Link for London can help."

The survey also found entrepreneurs' ideas about business finance were often removed from the practicalities required to help secure investment. To help new business start-ups, Business Link for London gives the following tips to raising finance:

Raising Finance Tips

Plan ahead - New businesses need to prepare a comprehensive business plan that answers questions about where the business is going and how funds will be invested.

Be open - Having a good credit history is important when looking to borrow from a lender, however if you are not fortunate to have a good credit history it's important to advise lenders of your financial history and your commitment to repaying the loan.

What do you need - You need to ensure that you know how much is needed and for how long.

Think about security - The lender will be looking at the security of its investment, such as business assets or guarantees, so you need to consider this and include it in your plan.

To help businesses become 'finance ready', Business Link for London is running its Access to Finance‚ program across the Capital. The aim of the programme is to get businesses 'finance ready' so that they can grow and develop.

The programme will cover up to 80% of the cost of the professional business advice provided. It's open to a range of companies, from sole traders, up to businesses employing 249 people, who are currently trading. To find out more about Access to Finance click here.

Posted September 6, 2006