Are you struggling to find finance for your new business, but you can’t see a way of getting the finance well then you haven’t heard of Business Angels and Venture Capitalists have you!
You may have looked into bank loans, asked friends and family for a loan or looked into getting a few credit cards to pay for you to set your business up. If these have all come up unsuccessful or not possible then why not look into private investors like Business Angels or Venture Capitalists.
Business Angels are usually from an entrepreneurial background who knows what you’re going through and therefore can offer invaluable advice and the finance you require if your business catches their eye and you have a well planned and thorough business plan in place for them to see. A business plan will show them what your goals and objectives are for now and in a few years, what will your business do offer a service or sell a product, who your target audience will be children, adults, teenagers or the elderly or a mixture. It will also show the prices and how much money you require to start the business up and also the finance you require for things such as a property, computers, rent, other equipment and also staff wages if necessary.
Business Angels usually offer around £10,000 to £75,000 in finance, depending on what you require as well as how well they think your business will do. If they think your business is a success from the start there more likely to offer you more in the way of finance, as whatever they put into your business they will get back and more. The more successful your business is the more money they are likely to get back. Business Angels may work in an Angel Network or Angel Syndicate, this means angels will group together and this way they can offer you more in the way of finance, from £75,000 to £150,000.
Venture Capitalists are slightly different in the way there are usually from an entrepreneurial background like business angels and can offer around the same finance from £10,000 to £75,000, but instead of mainly taking a backseat on day to day decisions and management decisions venture capitalists like to have a director’s role within the company or be part of the management. Some venture capitalists like to take a hands on approach with their investment and be apart of the day to day running and management decisions, and they usually take a percentage share of the business to begin with.
If you’re looking to raise finance for your new business venture whatever it may be and you don’t want to pay high interest rates from banks and other sources of finance and your family and friends don’t have the financial backing you’re looking for, Business Angels and Venture Capitalists might be your answer. They will be able to offer you the finance you require at the time you require it if you present them with a thorough business plan and shows your drive and enthusiasm for your business to take off.
By: Jene Pedder
Posts Tagged New Business
If a small business owner owns their home, they can tap a the equity that they have built in there home in order to finance their new business. The entrepreneur would visit the bank that holds their mortgage to discuss the option with their banker of freeing up some of the monies that they have in their home. Often the home owner can access 70% of the equity that they have built up, and in some cases, they can access up to 90% of their home equity.
Home equity financing is advantageous over other forms of small business funding for a number of reasons. The interest rate on a home equity loan or line of credit is far less than credit cards. The interest that the small business owner pays on the loan is tax deductible. Repayment terms are spread out and maybe somewhat flexible and almost anybody who owns a house has access to that money built up in their home equity. Lenders are much more comfortable with approving a loan secured against a cash asset that the applicant has already built up so the small business owner with equity in their home stands a much better chance of success pursuing this route.
The small business owner does have to be very vigilant with this type of financing as they must consider if they are in an inflated real-estate market or not. If there is a real-estate bubble in the neighborhood their house is in, their home could have an extraordinarily high appraisal value. This appraisal will be the basis on which the home equity lender will determine how much they can lend out. The higher the value, the more money will be available to the borrower. In the current low interest rate environment that we are in today, borrowers can get a lot of money for a low rate. But if that rate should move up fairly quickly, it can become very difficult to pay back the loan. But with careful planning and consideration of the risks involved with borrowing money against home equity, the small business entrepreneur can have ready access to the money they have built into their homes.
By: Ken Bissonette
“I want to start my own business and be my own boss!” Sound familiar? It may, because nearly 95 percent of people have this pass through their thoughts at some point in their working lifetime.
“Get rich quick” schemes never work. Yet we are repeatedly bombarded with TV and other advertizing promising us riches and status if we join their programs to gain “financial success.” But regardless of if the program they offer is a valid means of making an income or being successful, the truth is, new businesses rarely show any amount of profit in their first two years.
It has been estimated that as many as 90 percent of new businesses fail in their first year. Lack of planning is the number one cause of new business failure; “financial planning” tops that list. Being financial smart is perhaps your best chance at success. Follow the basic guidelines listed here:
Avoid business loans requiring the collateral of your home. Never mortgage (or sell) your home to finance your business. Never use a credit card to start or operate a new business. Keep your business idea in proportion with the amount of money you have available.
Use common sense; if your means of financing your new business might potentially put a strain on your personal finances, look for other means to support the new venture. One should NEVER try starting a business to “save” a poor personal financial situation, unless the new business requires no monetary investment and can eventually supplement the personal income. Consider a business which utilizes your skills or services and requires little or no financial investment to start.
Be financially prepared to survive your first two years in a new business. Allow for personal income needs as well as the businesses financial requirements. You may need to “keep your day job” until the business gets established.
Better to be one of the 10 percent of new businesses who succeed, rather than facing financial and emotional devastation due to poor financial planning.
Carol Denbow is the author of Are You Ready to Be Your Own Boss? For more on new business start-up or to read about the author, visit www.BooksByDenbow.Weebly.com
By: Carol Denbow