The second hurdle: Raising capital

2011-12-05T13:40:00.000-08:00

This week I came up with a brilliant new idea, I'm not going to share it with you as I don't know if it will work yet so I don't want you all stealing it. This is a problem that you will come to face as you come up with ideas. You'll now be thinking - right, I've got my idea but how am I going to get it to market with only the 0.32p I saved on my 4pints of milk last week. Which leads us on to the next topic, raising capital.

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.

The first hurdle: The idea

2011-11-17T11:30:00.000-08:00

Starting a business is not the easiest thing, in fact it couldn't be further from it. However in this blog I'm going to give you some advice as to how to kick start your business idea and turn that idea into what you really want it to be.

The hardest part is getting the idea, never stop thinking of idea's, as out of the thousands of rubbish one's you come up with you're bound to strike gold sooner or later. It's the simple idea's that are the best. Plus you don't necessarily need to think of the next big idea, you might just take someone else's idea and do it better. After all 'Innocent' weren't the first company to make a smoothie, they just made it brilliant. The same as Earlsdale aren't the first people to make a milkshake.
So once you think you have your idea. You don't want to take it to market straight away, you need to find out whether it'll work in the market place, whether the public actually need it or even want it.
Don't ask your friends and family whether they think it's a good idea as your mum will always think your ideas are brilliant even if it is just a ball on a string. Go out and ask people you don't know what it is that'll make their lives easier and whether your idea is really something they want. The great thing about marketing is making people want something they don't actually need.
So now that we've established nobody wanted our first brilliant idea of a ball on a string, we've come up with a truly brilliant second idea that the public seem to like then we can think about taking it to market. This continues onto step 2: Raising capital

How to run a business

The second hurdle: Raising capital

The first hurdle: The idea