When it comes to gaining funding for your business there are a number of different places and avenues that you can approach but the one that you actually choose to use will be based on your business needs. Some examples of the places that you can turn to in the hope of gaining the business finance that you need are bank loans, family/friends, credit cards, overdrafts and investors. These are only a handful of the finance options that are open to both start-up businesses and established businesses; however in some cases many businesses often choose to use a combination of many different sources of finance in order to cover all of the expenses.
It can easily be said that many new businesses will exhaust the internal financial resources which are needed and used to get your business off the ground during the initial start-up phase. It is because of this that new businesses will then seek additional capital in order for them to continue to grow. The statement it takes money to make money is also never more relevant than it is when it comes to small businesses. This is due to the fact that every small business needs money to get started, operate and expand as well as to grow.
If you are a start-up business and you are at the point where you require outside finance you must clearly identify the purpose of your business finance. The start-up finance that you gain for your business is generally acquired so that you can gain assets for your business. These assets are used to help your business achieve its profit making objectives.
When you start to look for ways of raising business finance you should have calculated roughly how much money you are going to need in order to cover all of your business start-up expenses. By doing this you have a better chance of getting the business finance that you want and that you require. Once you have gained a rough estimate of how much money you are going to need for your business start-up in order to get your business off the ground you can start to think about the various avenues that you are able to approach as a way of securing your business finance.
However when it comes to business finance there are only really two words that you need to consider, these are debt or equity. Debt finance, for example, comes in the form of bank loans and credit cards. Debt finance is money that is lent to your business. It will cover all of your business costs but you are required to pay it back. You will have to repay debt finance on a monthly basis with added interest. Before you agree to take out debt finance it is important that you are able to keep up with the monthly repayments. To find this out you should investigate your expenditure and ensure that you will be able to keep up with the payments sufficiently.
The second word that you need to know is equity. Equity finance is money that is invested into your business for a share of your business. You don’t have to pay this money back at any point within your business but it does mean that you lose an aspect of control over your business.
Within every business there are five main components that are needed in order to ensure that your business operates successfully. These components are Personnel, Equipment, Housing, Products & Services and probably most importantly Capital. Without capital all of the other components wouldn’t exist within your business.
By: Helen Cox
Posts Tagged Business Finance
Are you considering becoming a Wedding Planner but unsure what finance you will need to start your business, this article will cover some areas in which you may need finance for as well as where you may be able to get the finance for if you don’t have the money yourself.
You following points are the places where you may need finance to help your wedding planner business startup: -
· Renting building space – to set your business up you may need a room or rooms in which you can meet and greet your clients and suppliers. You may also have products to sell to your clients, which you might want to display in cabinets or on shelves. If you have a place for clients to visit the business will seem more reliable as many clients don’t just want to view a website but also want to meet and visit their place of work.
· Stock and Equipment – you will need a computer and access to the Internet if you want to be a wedding planner. The Internet has lots of useful information, suppliers of everything you will need for a wedding. A wedding planner will need to buy files and folders to keep any information a couple give them and any other ways to keep information stored.
· Staff – wedding planners usually start their business off by themselves but if their successful and begin to get more and more clients they might want to employ a few staff to help carry out the research in the up and coming months and also make sure everything runs smoothly on the day.
· Insurance – you should take out insurance not only on the building your using but on the work you do, just in case someone isn’t happy and they file a lawsuit against you, always best to be careful and take precautions just in case.
· Marketing – every business needs some kind of marketing, if no marketing is done there’s more of a chance that you may fail as a business. You need to market your business in wedding magazines, newspapers, have your own website and market it well using search engines and also let any bridal shops and suppliers know who you are and give them leaflets to hand out to there clients if possible.
· Hidden Costs – the hidden costs may be transport costs, traveling from location to location from your base to the clients home, from their home to the church or reception. Your traveling costs could be quite a lot.
So now you know where you may have to spend money to get your business running smoothly. Now you may be worried where are you going to get the money from to start your business up. There are many different financial options for you to consider these are:
· Friends and Family
· Bank Loans
· Credit Card
· Home Equity
· Business Angels
· Venture Capitalists
Each different financial option has different good and bad points. Friends and family may not have all the money you need, if they do you really want to borrow from them? A banks loan charges high interest and you will need to show a detailed business plan, a credit card may not give you the whole amount you require so you would have to use more than one and this can be costly, using your home as equity can be a bad gamble if your business doesn’t take off, business angels and venture capitalists take a share of your business, they give you the finance you need and help you with making your business successful.
By: Jene Pedder