How to set up and run a small business

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How to fund your business

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Invoice finance and factoring are two terms you may have heard thrown around in relation to business finances – but what exactly are they?

Well, they’re not quite a loan, but they are a source of funding – and they’re secured against your outstanding, unpaid client invoices, so you might prefer to think of them as a kind of secured loan.

At their most basic, both methods allow you to unlock the value of your unpaid invoices, closing the gap between the invoice date and the due date – for a fee, of course! Continue…

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Angel investors can be a lifesaver for a small enterprise – not only can they supply capital investment, but they often have years of valuable experience to offer a fledgling business.

As viewers of Dragons’ Den will know, securing angel investment is no easy task. Although much of the BBC show is put on for our entertainment, many of the business owners who appear on the show make the same fundamental mistakes.

Here are five things you must consider if you are seeking investment from a business angel;
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Cash is the lifeblood of any business. And in the first few years of your start-up, the ability to get cash into your bank account faster than it goes out again will be one of the main measures of whether it is a viable business.

Every year, many small businesses fail, simply because they run out of cash. Even profitable businesses can be brought down by cash flow problems caused by slow-paying customers.
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With late payment problems a constant burden for small business owners, we look at the most common delaying tactics used by customers, and how you can overcome these late payment excuses.
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If you’re doing well enough that your business is growing rapidly – and there are plenty of businesses achieving that no matter what you read in the media right now – then you may find yourself in a unique financial situation.

And that’s where you are selling so much that you can’t get the money in the door fast enough to pay for the next batch of products.
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One of the big issues when you’re taking on a new client is whether you can trust them to pay you or not – so how best do you deal with this concern?

Some people charge a deposit or part-payment upfront, but that can be off-putting to customers, who equally don’t know whether you’re trustworthy and might decide to go with a freelancer who doesn’t ask for payment upfront.
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While “entrepreneur” may occasionally be a euphemism for “out of work”, there are more and more individuals working in earnest to start a business of their own. Indeed, statistics show no fewer than 400 million such individuals globally, with over 2 million in the UK and 20 million in the US.

Sadly, many of these ventures will never get off the ground at all. Of those that do, the majority will fail. Of those who submit business plans to venture capital investors, less than one percent will get the funding they seek.

Those elite few who do raise finance give away large portions of their company and control in return. Worse still, many business founders who receive venture capital money get fired within a year of the investment.

Despite the challenge of raising money, and the serious potential downsides, there is a widespread notion that if you are an entrepreneur looking to build a high potential business, you need to write a business plan and raise a few million pounds. But this vision is essentially wrong.
Despite the challenge of raising money, and the serious potential downsides, there is a widespread notion that if you are an entrepreneur looking to build a high potential business, you need to write a business plan and raise a few million pounds. But this vision is essentially wrong. Because, if you are smart you can get your customers to fund your business.

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When it comes to selling a business, the most important question you need to ask is – how much is it worth?

There is no single formula that can be used to precisely value every private business. The seller will want to drive the price up, and potential buyers will want the opposite.
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Although it may not reflect ‘real life’, the BBC’s Dragons’ Den programme has done a good job in highlighting the role that angel investors play in the business world.
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The Government launched the EFG scheme to encourage lenders to provide further funding to smaller businesses following the credit crisis. In this article, we look at the how the scheme operates in practice, and how small firms can benefit.
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Many businesses will need to raise funds at some time – either at the start-up stage, or to finance expansion. With ‘traditional’ credit still in short supply and the possibility of a ‘triple dip recession’ in 2013, here is an overview of the various options open to small businesses looking to raise funds.
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With the first two months of the year typically the worst for late payment, a leading debt recovery law firm has provided some advice to small businesses on how to deal with late paying customers by being tough from the moment an invoice becomes overdue.
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If you’ve got a business headache right now, there’s a pretty good chance it’s to do with clients owing you money.

It’s almost as if the economic downturn has become a prime opportunity for anyone who fancies improving their own cash flow to help themselves to better credit terms from their suppliers… but without asking permission.

That has a knock on effect right down the line. And it’s no wonder that small, cash poor companies at the bottom of the chain are the ones that suffer the most.
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The single biggest cause of small business failure in the UK is poor cash flow management, most often brought on by late payment issues.
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Credit limit application forms are a useful way of finding out the financial capabilities of a new client or customer, before you agree to provide them with any form of credit.
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Often when you see adverts for loans – particularly debt consolidation loans – you’ll hear them speak of ‘CCJs’ as something that might have prevented you from being approved for a loan elsewhere.

CCJs are County Court Judgements, and are a legal process designed to resolve issues such as non-payment by taking your client to court.
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A recent survey shows, once again, that late paying customers remain the biggest single threat to the health of the UK’s small businesses. Here, we provide some tips on how to avoid late payment problems.
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Raising business finance is difficult at the best of times but in today’s age of austerity banks, business angels and governments are tightening their belts, cutting off the supply of cash which is leaving start-ups and growing businesses who need seed finance thirsty for money. As a result venture capital is being democratised.

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Cash flow is the most important thing in your business – more important even than profit. If you imagine cash to be the blood cells of a business, then cash flow is the flow of blood, keeping the business alive.

A healthy person will quickly die without blood. And a healthy profitable business will quickly die if it runs out of cash.
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When you are starting a new business you have a million and one things to think about. As a new business owner, many of the issues you will need to tackle, will be completely unfamiliar to you.

With so much to do, you will need to learn quickly. If the financial side of the business isn’t your strong point, here are 10 tips from ByteStart to help you stay on top of your business finance.
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