Given the reluctance of the major banks to meet the lending targets that have been set for them by the Government, here are some ways you can start up in business on a budget, and without any help from your bank.
Credit Cards – Many new business owners use their own credit facilities to get going – savings, personal loans and credit cards are all instant sources of finance, although there are obvious risks involved if the business doesn’t get off the ground.
Family & Friends – A large number of new businesses receive help from friends and family. You can either borrow funds, or offer a share in your business idea in return for a cash injection. They are more likely to be forgiving than your bank if things are tough in the early days.
Go Virtual – These days, many start-ups don’t even need an office. Modern technology allows you to work from home, but maintain a professional image. Virtual office services can provide telephone answering, mail forwarding, a registered office address, and even meeting facilities in some cases.
Outsource – The web provides access to millions of freelancers worldwide, who can provide services such as web design and web marketing for a fraction of the price you might expect to pay. Leaders in the field include Odesk and Elance.
Barter – Adopt the medieval free market approach and rather than pay for all the service you’ll need, see if you can trade your skills or products with other businesses who can provide something you need in return.
Lease – Depending on the tools you need for you trade, you may be better off leasing machinery and other equipment, than spending valuable capital upfront.
Cash Flow – Consider using an invoice finance (factoring) firm, which will free up your cashflow. You will have access to cash tied up in unpaid invoices right away, and the invoice finance firm will also ensure than late payment problems don’t escalate.
Software – The web, and particularly, cloud computing, have revolutionised the way software can be provided. Everything from accounting to spreadsheets and document sharing can be done online, for virtually no cost.
Telephony – Consider using Skype or other online communications services. You telephone bill will be vastly reduced, and you can forward calls, make them on your mobile devices, and talk to other Skype users for free – anywhere in the world.
Tax – Find a good accountant who will ensure you don’t pay any more tax than you need to. Ask about any tax free allowances or tax reliefs you can claim against the business, and if you’d be better off joining the Flat Rate VAT scheme.
Free Banking – Most of the high street banks provide up to 2 years’ completely free banking, so you won’t have to pay any transaction charges. Make sure you find out what charges will apply once the free period ends though.
Social Media – Sign up to LinkedIn, Twitter and Facebook, and get in touch with potential customers via the web. You don’t need to be a ‘trendy’ business to benefit, and all it will cost you is a few hours of your time each week.