With credit hard to find over the past few years, people thinking of setting up a business have had to come up with creative ways to fund their ideas. Here are some tips from the Bytestart team:
Financing a start-up on a budget
1. Swap – rather than paying for services, you may well be able to trade skills with other small firms. You might be able to provide PR support to an IT consultancy, and they could provide help with your website, for example.
2. Overheads – it has never been easier to keep your costs to a minimum. The web has enabled business owners to work from anywhere. Many start-ups can be truly virtual these days.
3. Free Banking – Most of the major banks provide 12-24 months completely free banking. You may be forced to pay a monthly charge after the introductory rate has expired, but why pay when you don’t have to?
4. Rather than invoicing clients and customers after they have received the goods or services, try to stage your invoice payments so you receive some of the funds upfront or half way.
5. Make sure you keep on top of your cash flow. One of the main reasons why start-ups fail is because they run out of cash, even if they are owned money from unpaid invoices.
6. Ask your accountant if you would benefit from being on the Flat Rate VAT scheme. This scheme not only helps simplify how you account for VAT, but you may be thousands of pounds better off as a result of the fixed percentage allocated to you depending on your industry type.
7. Given that credit is hard to find (particularly business lending, despite what the Government(s) claim), many small business owners use credit cards (particularly if you have a 0% period), overdraft facilities and all kinds of inventive borrowing from family and friends. This is nothing to be ashamed of, most people would rather borrow from themselves or their nearest and dearest than a commercial institution.
8. Use Freelancers – With more and more people adopting the flexible way of working (or being forced to do so), you are more able than ever to hire staff on a non-permanent basis.
For 50 tips on how to market your new enterprise on a budget, read Bytestart’s Guide to Bootstrap Marketing.