There are several ways to finance a business. These include bank loans, finance from independent lenders, and crowdfunding. Your capability of financing your business depends on convincing somebody else to invest in your idea and you.
This is easier said than done, however. Investors and lenders have tightened their belts in recent years, offering lifelines to only the most affluent of projects.
The way around this is to present your business in the proper way. Outside investors and lenders require a minimum level of financial and operational information to even consider financing. Chancers and threadbare ideas need not apply.
To help you collect everything you need to finance your business, here are some vital starting points:
Business Plan: Inspire investors with a detailed roadmap
Your business plan must include a roadmap for the first three or five years of company operation. Why? Because investors and lenders will need to assess the short, mid and long-term potential of your business.
By providing this information in your business plan, you are going to show excellent foresight and make their jobs easier.
Financial figures, operational predictions, management structures, director profiles, and market analysis is needed for the roadmap.
These elements will combine to create a clear and concise view of how your business will perform. Only then, can your business plan detail your brand, products, services, and other business offerings.
Your funding request: Don’t overlook buyout plans and debts
Following on with your business plan, yours will also include a funding request.
If your roadmap is the sales pitch, then your funding request is the closer. It will include the funding requirements for your business and it will breakdown how that funding will be spent. This gives investors and lenders a clear picture of where their money will go.
The two most commonly overlooked elements of the funding request are debts and buyout plans. These fall into the category of future insight.
With buyout plans, investors want to know what will happen if a buy-out happens over a projected term, such as three or five years. With debts, investors want to know how debts intend to be repaid over a term.
These points may seem rudimentary, but some investors and lenders will ask about them.
The perfect partner: The funding options available to you
For most start-ups, lending is the best way to finance a business. There are two main ways to go about this. The first is with a high-street bank.
High-street banks offer quality products, but the application criteria are stringent, and the decision-making process is sometimes very slow. Many applications for startup finance are turned down out of hand.
If you are accepted, however, you will enjoy excellent customer service and support from a high-street bank. These are the major benefits for start-ups.
The second option is financing with an independent lender. Independent lenders are more flexible in their finance and repayment terms and they also offer a faster decision process than most big banks. This makes them a better choice for some.
In terms of value for money, independent lenders are on a par with high street banks. They offer similar interest rates over a fixed term.
Some independent lenders also go the extra mile by considering all applications on an individual basis. This adds a human element to the process, something which is often missing with the big banks.
Here at Nationwide Corporate Finance, we can finance your new business, startup business or help with unexpected tax bills. Visit us today!
More on funding a business
ByteStart is packed with help and tips on all aspects of starting and funding your business. Check out some of our most popular guides;
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- Asset Finance – A Guide for small business owners
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