Entrepreneurs Brief Guide
“How to Finance Your Business”
Dr Jim Porter
Every business requires financing when starting up, and the majority of businesses will require money before the first sale is made. For your start up business, you may need to purchase equipment and set up offices. You also need capital once you start trading, as you will need it to pay operational costs..
In 30 minutes, learn how to:
Find out how much money you need
Find sources for financing
Search for suitable finance options
Copyright
How to Finance Your Business
Dr Jim Porter
Revision: SW1.006.001
Copyright © 2011 – All Rights Reserved.
Smashwords Edition
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ISBN:
978-1-4660-0823-6
Publisher: Smashwords, Inc.
When starting any new business, a solid financial base is very important as the correct financing package can prove to be very beneficial for your business.
Every business requires financing when starting up, and the majority of businesses will require money before the first sale is made. For your start up business, you may need to purchase equipment and set up offices. You also need capital once you start trading, as you will need it to pay operational costs.
Fortunately, there are a wide range of possible financing options when starting up. For example you can use your own savings, borrow from banks, family and friends or solicit the interest of investors. You may also qualify for government support and available grants. Selecting the most appropriate source for your needs is paramount.
In reality, most businesses use a combination of these financing options to meet their specific needs and circumstances.
Deciding how much you need
Some tips for deciding on the amount of finance you may require:
You should always draw up a budget based on your business plan. This budget will show your forecast on sale, expenditure etc. Ensure your forecasts are realistic and not over-optimistic.
You must identify how much financing you require and when you will require it. A start-up business may incur more expenditure than its earnings for the first few years and you will require continuous financing for this period. Some businesses have seasonal sales patterns and make high revenues only during a particular time period.
Always analyse worst case scenarios so you know how much finance you will require in case something goes wrong. For this reason, you should always allow for some contingency funding.
Never wait until the need arises to arrange for extra finance, instead arrange all your financing options beforehand. Always inform the bank of the total amount you will need, even if you plan to borrow in installments.