So we've got our idea, we know people want it but we now have to make it available to the market. The first question is - How much money is it going to need to get it to market? When it come's to investing in business you are going to have to bite the bullet, if you don't believe in your product then no one else will, however ask yourself carefully whether you really think it's worth the investment, if so then great.
Before you go asking random people in the street for their money in return for 1% of mickey mouse's ear warmers you're going to need a business plan. Banks aren't going to take you seriously unless you take yourself seriously. So always dress ready for business as you're never sure who you might meet. Effectively your business plan is your initial selling document - it's either going to get you in the door, or it's not.
You need to think who you're going to be pitching the business plan to, if it's to a bank then your bank manager will be looking over it to see how likely it is that you will repay the money, whereas an equity investor is going to be looking for growth potential. Essentially this is like a CV for your business and if it fails to impress you're going to be going home empty handed. So ensure your business plan fits to these needs.
If you already have the money to invest in your back pocket then even better. If not then all is not lost, firstly try asking friends and family as they might be interested in investing some spare cash into an idea. If however they don't have expendable income then there are many more possibilities such as angel investors (dragons den), these are people who will inject their own money into your business in return for a share. These people can be hard to come by and it is quite often down to being in the right place at the right time, networking is a must if you're going to find someone to invest. Someone is always bound to know someone that's looking to invest in the next big thing.
Another way of raising capital is through a business loan, in today's climate these are becoming harder to find if you don't have much to borrow it against. Due to the recession banks are very reluctant to lend
Finally another possibility is going to Community Development Finance Institutions (CDFIs) who provide financial support and capital to businesses and individuals that would otherwise not have access to, or have been refused services by, mainstream financial service providers. You can try looking into the Department of Business, Innovation and Skill for help as well as Business Link, both of which will point you into the right direction of applying for a grant.
So if you're one of the lucky few to have got your hands on the money you need to start a business then that's one of the hardest steps, as without the cash flow it's going to take a lot longer for you to get it off the ground. This therefore leads us on to the next step: Going to market.
Nice article Harry, you have laid that out in a simple and easy to understand way for a part of starting your own business which is a minefield of misinformation sometimes.
ReplyDeleteOne thing you could add when looking for ways of getting cash to get off the ground is this:
Could your potential business (idea) be a Social Enterprise? in that, what you are going to do, could in some way benefit your local community (e.g. provide jobs but there are many other ways) and if so, form the company as a Social Enterprise because there are lots of grants out there and various organisations simply gagging to give out some cashola lol :)
Sue - Enterprise2Work.org