finance4founders.com

Raising money for business

We are a country of shop keepers said Napoleon, whilst not exactly true we English certainly like to run our own businesses. But with nearly half of all new businesses failing within 2 years it is important to have the right financial backing. There are many different types of businesses but for the purpose of this article I shall focus on online companies. A case in point would be the successful online retailer Hot Corsets which started from a back bedroom selling basques and developed into a large corporation selling lingerie world wide. The owner was initially selling one or two items a week through their website and on eBay but with a secured loan managed to invest into a proper marketing strategy and build the business into what it is today. If you are going to secure a loan on your family home for business purposes make sure that you have done your homework and don’t spend the money easily!

Many a time have I spoken to people who borrowed money for their business only to fritter it away on holidays, cars and gifts. So so easy to look at your bank balance when the money has been paid in and feel rich, but remember it has to be paid back. Make sure you have a good business plan and that you have factored in every possibility. What would happen if you were taken ill and unable to run the business? Would you have a contingency plan?

It’s a good idea to have some money in reserve for such occurrences. In some cases it might be worth employing the services of an accountant to look into these things for you.