Bussiness Finance
an introduction to business finance
When you start up in business you will need finance. Should you use your own money, borrow from family and friends, or go straight to the bank? What about invoice financing and factoring? Do you want a business angel? Understand the different forms of borrowing and choose the best financial option for your business. how much do you need?
To work this out you need a business plan. The business plan will help you work out your financial needs, including the initial start up costs and running expense. You can draw up a budget that shows your forecast sales, expenditure and – absolutely vital – your cash position for each month.
Consider possible peaks and troughs in the business (perhaps seasonal) and remember that many start-ups spend more than they earn in the first couple of years. Customers may not pay you immediately but you still have to pay all your bills to keep trading. Make sure you have a contingency fund in case things go wrong. Try to have at least enough capital to cover projected expenses for at least six months – the nature of your particular business may mean you need more. types of finance
Most new businesses use a mixture of finance - savings, borrowing from friends or family, personal loans and bank borrowing. Overdrafts and fixed term loans are popular. New start-ups can also apply for grants and interest free loans and bigger businesses with good prospects might attract an outside investor, like a business angel. Raising money from shareholders may also be an option. If you are short of cash at the outset you can consider leasing and hire purchase for vehicles and equipment, rather than buying. If your business has lots of unpaid invoices you may want to consider invoice financing. All methods of finance bring their own advantages and disadvantages and you should take advice before making a decision. using your own money
You will have to invest some of your own money if you want to interest a bank in
When you start up in business you will need finance. Should you use your own money, borrow from family and friends, or go straight to the bank? What about invoice financing and factoring? Do you want a business angel? Understand the different forms of borrowing and choose the best financial option for your business. how much do you need?
To work this out you need a business plan. The business plan will help you work out your financial needs, including the initial start up costs and running expense. You can draw up a budget that shows your forecast sales, expenditure and – absolutely vital – your cash position for each month.
Consider possible peaks and troughs in the business (perhaps seasonal) and remember that many start-ups spend more than they earn in the first couple of years. Customers may not pay you immediately but you still have to pay all your bills to keep trading. Make sure you have a contingency fund in case things go wrong. Try to have at least enough capital to cover projected expenses for at least six months – the nature of your particular business may mean you need more. types of finance
Most new businesses use a mixture of finance - savings, borrowing from friends or family, personal loans and bank borrowing. Overdrafts and fixed term loans are popular. New start-ups can also apply for grants and interest free loans and bigger businesses with good prospects might attract an outside investor, like a business angel. Raising money from shareholders may also be an option. If you are short of cash at the outset you can consider leasing and hire purchase for vehicles and equipment, rather than buying. If your business has lots of unpaid invoices you may want to consider invoice financing. All methods of finance bring their own advantages and disadvantages and you should take advice before making a decision. using your own money
You will have to invest some of your own money if you want to interest a bank in