Do you need some money for your business?
Well maybe that's something we can help you with! After all, who doesn't like money, and a good financial boost can help to drive you business towards those new goals, whether it be drive up sales, buy more equipment, hire staff, find new premises or even just make yourself more known!
We won’t quite be getting the money for you - you’ll be doing that yourself. But don’t run off quite yet, for we’ll certainly tell you how to be most successful at getting funding for your business! So here’s a few insider tips that will get you well on your way to getting that cash to take your business to that next level. And there’s plenty more insider knowledge where that came from, so don’t forget to get in touch and check out our free workshops!
1. What funding do you require?
You’ve got a cash gap that needs plugged. But like putting a square block into a circular hole, you need to make sure you set out your funding strategy to fit the need. For instance a short term but fatter cash gap could be plugged with an overdraft. A longer and more consistent gap may require a loan. A short and thin gap could require simply a little self investment through the ‘family bank’, or even through a little crowd sourcing (both of which we’ll get to so read on!)
2. What type of funding would you like?
You have a choice of three to choose from, each very different and with different pro’s and cons, so make sure you choose wisely! The main types are outlined here:
Think bank loans and borrowing. On the plus side... Often a quick decision on funding; you’ll retain 100% ownership of your business; and you can improve your credit rating through paying the loan back. On the negative side... By having 100% responsibility of business decisions, higher risk to business through no second or third opinions; high interest rates on loans; and you must begin repaying immediately.
Think Dragons Den. On the plus side... You can bring in extra business skills through investors; you can share the risk in making big decisions; no debt worries, and if the company fails - you don’t have to repay anything; investors will bring additional networking and contacts. On the negative side... You must give part of your business away; added pressure to meet expectations; sometimes very long decision periods as investor may wish to investigate your business first.
3. Sources of Funding
So where can you get funding, other than a bank or investor. Well here’s a few suggestions:
Family and friends
Remember the bank of mum and dad? Well you can also call upon the ‘bank of the rest of your family and friends’ to see if anyone will help you out. But beware- it can often damage relationships by mixing business and taking money. Envy can also play a part if you begin to get successful.
Self funding or savings
You can use your own money to start a project, but often its better to keep your money as savings to use as collateral or a safeguard rather than using it all for the business upfront.
Why not advertise for the general public - anyone at all - to give you a bit of money, and in return they get something from you for free or heavily discounted. That sounds easy doesn’t it? That’s Crowd Sourcing! And you don’t need to pay anything back to anyone!
4. Make the banks work for you
What can you do to sweeten the deal with the banks and increase your chances?
Business Planning - The good old business plan! Show good allocation of resources including human and financial to show that your company will have the best chance of success. A business plan is something any investor will want to see, and can be the difference between a yes or no! Book one of our business plan workshops now!
Financial planning - Figures must be accurate, detailed and based on evidence and research. Skimping and cutting corners on this will just make banks skimp and cut straight out of the room!
Let them know they’ll get their money back - This is a key point that the banks are interested in, so build a contingency plan into your business plan to cover this if the business fails. Banks are also keen on collateral, which decreases the risk for them, so make sure you can demonstrate this too.
Put some funding in yourself - Banks also like you to show the drive and passion to make a go of the business by investing your own money in too. Often banks will give you a deal where they pay a percentage and you pay a smaller percentage. This is where friends, family, savings or even crowd surfing can come into their own!
Enterprise North East Trust have also just launched an Enterprise Fund open to businesses within Aberdeen or Aberdeenshire. Grants of up to £250 are available by completing a simple application form. Please click here for more information on the Enterprise Fund.
For more information on workshops including Funding, Marketing and Business, check out our Business Gateway pages.
Alternatively you can contact us to get in touch with an advisor:
Tayside 01382 443 400
Aberdeen City & Shire 01224 729 000
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