How to set up and run a small business

Leaderboard – Finance

You are here: Home » Finance

How to fund your business

Key Guides

When the bank won't fund your businessPROMOTED GUIDE – This is a promoted guide from Funding Xchange – the business funding marketplace where lenders compete to fund your business. Get Funding Now

 

If you have approached your bank and found it difficult to secure the funds your business requires, you’re in good company. Banks are declining up to 50% of loan requests from some smaller businesses.

Banks’ lending decisions have very little to do with you or the prospects of your business. And their outdated processes and high costs of capital make it difficult for them to lend to smaller businesses.

Business owners are also being frustrated by the inability of banks to provide flexible forms of credit to businesses. This is highlighted by the fact that the availability of business overdrafts, long a favorite tool for businesses to smooth cash flow, has shrunk by more than 30%.

So where else can you get funding for your business?

Continue…

{ 0 comments }

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.

Although there are relatively easy ways to value certain parts of the business – such as stock, fixed assets (land, machinery, equipment etc.), there will very probably be a sizeable intangible element to the value of a business.
Continue…

{ 0 comments }

The Albion Growth Report – a study of 1,000 SMEs which aims to explore the factors that help businesses grow and the issues that hold them back – has found that the popularity of bank loans and business overdrafts is declining.

Instead, business owners appear to be turning to equity finance and other long-term financing options in place of the traditional bank sources.

Continue…

{ 0 comments }

Young businesses and start-ups that are looking to raise funding have a dizzying array of choices nowadays. In fact, there has probably never been a bigger range of places to go for early-stage finance, from crowdfunding and angel investors through to government-backed start-up loans and P2P lenders.

But before we take a look at the options in more detail, it’s important to think about what sort of funding you’re after for your business, and what you’re prepared to offer in return. The basic division here is between equity and debt. Continue…

{ 0 comments }

One of the biggest challenges start-ups and fledgling businesses face is securing the funding they need to realise their potential.

A majority of business owners feel that finding finance is difficult in the current climate, and in particular, that banks are reluctant to provide business loans at competitive rates.

So to help you maximise your chances of getting that all-important business loan, we asked Rishi Khosla, the CEO and co-founder of OakNorth Bank – a bank that specialises in lending to entrepreneurs and growth businesses – to share his valuable insight and personal experiences with ByteStart readers;
Continue…

{ 0 comments }

Dealing with late payment can be tricky for small and medium sized businesses. Handle it wrong and a customer could be lost, ignore the issue and it can stifle business growth, have a huge impact on cash flow and even cause a company to go bust.

Staggering figures published in a government paper in May, revealed that small businesses spend around 130 hours a year chasing late payments, equating to an average cost of £1,500 per business.

The problem is endemic with two thirds of SMEs suffering according to research by the IOD, but follow this 12-Step plan and you’ll be able to minimise the damage late payment causes.

Continue…

{ 0 comments }

If you need more finance to grow your business, there are a number of options which you might wish to consider. You could turn to your own personal savings, ask family members for help, get a bank loan, issue shares, or speak to some business angels or venture capitalists.

Or you could consider peer-to-peer (P2P) lending.

P2P lending is fast becoming the norm for businesses needing finance to get an idea off the ground or raise the capital necessary to expand and take projects to the next level.

But whilst it’s become a more common financial avenue for SMEs to pursue, it’s still not as well-known as it could be. According to a 2014 Nesta Report, only 44% of UK small businesses have heard of P2P lending.

So what exactly is peer-to-peer lending and how can small and growing businesses use it to finance growth?
Continue…

{ 0 comments }

When people talk about ‘gearing’ in a business, they are usually referring to one of two types;

  1. Financial gearing
  2. Operational gearing

Here’s a guide to what gearing is, and how you can use it to increase the returns your business makes;

Continue…

{ 0 comments }

For most business owners, selling their business is a once in a lifetime event. It’s also often the culmination of decades of hard graft so it’s important you get it right.

When building up your business, you will have invested a huge amount of your time, energy and money so you will want to make sure you maximise the return when it comes to selling up. But without any previous experience to draw upon, it’s all too easy for business owners to sell their company for less than it is worth.

With so much at stake, we asked Clinton Lee of UK Business Brokers to help explain how you can get the best possible price from a buyer, when you are selling your small business;
Continue…

{ 0 comments }

Borrowing money from a bank to finance your business is a lot harder than getting a loan to buy a new car or to improve your home.

Banks have a number of tough rules that you need to know before you approach them for a business loan, and these rules have become even more stringent as a result of the credit crunch.
Continue…

{ 0 comments }

Business owners that are exploring some of the newer business funding options, commonly referred to as ‘Alternative Finance’, can sometimes struggle to distinguish between ‘crowdlending’ and ‘crowdfunding’, not least because they sound remarkably similar.

Both describe ways of raising business finance, but there are huge differences between the two which need to be clearly understood to avoid any tears at a later stage.

So how do crowdlending and crowdfunding differ, and what opportunities do they offer start-ups and small businesses? Continue…

{ 0 comments }

Starting up and sustaining a company is a tough challenge for even the most gifted of entrepreneurs or the brains behind the business world’s biggest and best ideas. Within that context, the margins for error tend to be slim, particularly when it comes to financial matters and the business of balancing your books.

Here are some of the best options potentially available to you if your company is facing a financial squeeze and is running out of cash, along with some ideas on how to approach the turnaround process.
Continue…

{ 0 comments }

When you are starting a new business, you will most likely need to produce a cashflow forecast.

If you’re looking to raise money, from either a bank loan or outside investors, a cash flow will be one of the financial forecasts that you will need to produce for prospective lenders and investors.

As your business grows, a cash flow forecast becomes an increasingly important tool to help you manage the business and to avoid any sudden cash flow problems.

We all therefore appreciate the importance of a cash flow forecast, but are there any trade secrets to doing it better?

Here are some top tips to help you produce a better, more accurate cash flow forecast first time, and how you can use it to give your business a commercial advantage.
Continue…

{ 0 comments }

Although it does not necessarily herald the end of a small business, decline into insolvency can bring significant changes in company structure, operations and management style.

It’s worth checking your company for characteristic signs that, if spotted and acted upon early enough, could help you to steer the business away from danger.

Here are 8 early warning signs that indicate your small business could be heading for financial trouble, and the actions you can take to overcome them. Continue…

{ 0 comments }

Looking for an investor to help fund your business? You’d better make sure they’re an angel, not a dragon!

Most businesses require outside investment at some point in their development. Whether you are a new business needing a cash injection to get started, or an established company looking to launch a new product or move into new markets, attracting investment will be essential to your venture’s success.
Continue…

{ 0 comments }

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.
Continue…

{ 0 comments }

If there’s one piece of advice to hold above all others while running your business, it’s this: cash is king.

It doesn’t matter how much you are selling or the size of your profit, if your business doesn’t have enough cash to pay staff and suppliers you are in big trouble.

Even successful and profitable businesses can be struck by cash flow problems because as they grow, more working capital is tied up in the business.

Without proper cash flow planning good businesses can suddenly find they don’t have enough money to buy resources to fulfil the orders coming in.
Continue…

{ 0 comments }

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.

Without clear credit control procedures to ensure your customers pay you promptly, your business won’t be able to grow and could jeopardise your ability to pay your own bills in a timely manner. That’s the start of a slippery slope that can end in the destruction of years of hard work.

Don’t let your business die this way. Here’s how to build good credit control procedures into your operations from day one, with ByteStart’s seven ways to make sure your customers pay you on time, every time. Continue…

{ 0 comments }

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 have to give away large portions of their company and control in return. Worse still, many business founders who do 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 successful, growing 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.

{ 0 comments }

While it may be tempting to ignore a mounting debt problem in your business, it is the worst thing you could do.

If your business is a limited company, there are many avenues open to you to resolve debt-related problems. So, where do you start?
Continue…

{ 0 comments }

Business debt recovery – A practical guide for small businesses

October 8, 2014

If your customers do not pay you on time (or at all), then they are inflicting serious damage to your business. It is something that is so often overlooked as ‘one of those things’ small businesses just have to put up with, but with the right approach you needn’t let your business succumb to this […]

Raising finance for your business

October 8, 2014

To raise money to grow your business, you have to convince likely lenders that your idea is profitable, or at least has the potential to be. Here, we take a look at two the two key elements that should drive your search for funding; The different types of finance available What lenders and investors look […]

How to avoid late payment problems

August 28, 2014

The single biggest cause of small business failure in the UK is poor cash flow management, most often brought on by late payment issues. It’s therefore vitally important that you do all you can to ensure that your customers pay you on time. Here are 7 things a small or start-up business (or any organisation […]

Using ‘Credit Limit Application Forms’ for new customers – the factors you need to consider

August 12, 2014

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.

What exactly are invoice finance and factoring, and what benefits can they bring to my business?

June 12, 2014

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 […]

How to get your business ready to sell – 10 things to do before you put up the for sale sign

April 30, 2014

So you want to sell your business? The place where you’ve spent more time than with your family; invested money which you’ve sometimes had to borrow in order to expand or buy new equipment; given your heart and torn out your guts; worked anywhere from 60 – 80 hours a week, maybe more; tackled a […]

5 things you should know if you want to attract business angels

April 22, 2014

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 […]

Factoring for small businesses – the pros and cons

November 21, 2013

If you’re doing well enough that your business is growing rapidly you would expect your finances to be healthy. But that isn’t always the case. If your firm is expanding quickly, you could find that your cash flow becomes a problem, even though your business is profitable. It’s a unique financial situation where you are […]

The free tools businesses can use to credit check new clients

October 25, 2013

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 […]

What are business angels and how they can help your business?

May 3, 2013

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. It may seem counter-intuitive, but the ongoing economic downturn has actually resulted in an increase in business angel activity. As the returns from more traditional means […]