- 12 Oct
Business Startup Guide To Funding
A critical aspect of starting a new business is ensuring that you have sufficient money to trade. This could be to cover the initial startup costs e.g. purchasing equipment, and to cover ongoing costs e.g. staff wages and buying stock.
Cash Flow Forecast
A cash flow forecast is an essential part of the business plan for any new start company, it may be produced by your accountant with your input, or you may be able to produce it yourself. That forecast will predict the inflow and outflow of cash through the business. This should highlight the volume of startup funding that may be required in order to cover peak requirements. Prudent judgement suggests that you should ensure that you have some headroom in place to cope with unexpected cash flow troughs.
Sources Of Funding
If your business is going to be "self-funding" (income received will allow it to meet its liabilities) that is the ideal situation, but one that rarely occurs - most businesses either need cash to complete their setup or working capital to enable them to trade. The next best case is that you can inject your own money, without having to pay any fees. However, using your own money often means that you lose income from those funds e.g. interest or similar returns - and your capital is then at risk.
Our list of sources of business funding sets out all the possible options to fund a business, however many of those will not be available to a new start business, especially where there are no other assets available as security. I have also written previously about the difficulties new starts can have finding finance.
Aside from equity investors (where you have to give up some ownership and control), and using your own money, or that of friends and family, receivables finance is one of the few options that can be freely offered to completely new startup companies. The reason for this is that it is secured against your book debts, the money owed to you by your customers. Therefore, the funder can take a more relaxed view.
There are also a number of financial benefits from using factoring (this is receivables finance with a credit control service included in the price). One of the issues for new companies is that this type of funding is often not known by new businesses, as it does not have such a high profile as other forms of finance.
If you have other assets available e.g, property, this does open up a few more options. There are lenders that will accept new startups providing there is some form of tangible security in the background.
Navigate to any of the other sections of this free business startup guide:
- 19 Nov
Who Provides Invoice Finance To Small Startup Companies?
At the Alternative & Receivables Finance Forum, in London last week, I had the opportunity to sit in the audience prior to the panel that I was speaking on. The other panel was about "Innovative Solutions In SME Financing". SMEs are small and medium sized businesses.The discussion started with a presentation from BVA BDRC about their SME Finance Monitor, which showed some movement towards SMEs...
- 19 Sep
Funding A Confectionery Manufacturer With Orders From A Supermarket
Another quirky example of a small startup customer that contacted us for funding help, where other invoice finance companies had been unable to help - due to the small size of the company.They were a small confectionery manufacturer that have traded as agents for a few years, but are developing their business by moving to supply as principals to supermarket chains.GET A FUNDING QUOTEThe had...
- 18 Jul
30 Seconds On - Startup Funding For New Companies
This is my latest explainer video in the series "30 Seconds On Finance".It explains how you can raise finance for a new start-up company, even if you have already been declined by a bank for a bank loan or an overdraft.With a new start-up company, often they have no assets, and no trading history. Hence banks are sometimes not keen to support them with traditional forms of finance, such as loans...
- 14 Mar
New Start Recruitment Funding RPO Debtors
We have mentioned many times before how we have been able to help recruitment companies that need funding against RPO debtors.The issue with securing invoice finance against our PO debtors, is often that the finance companies can struggle to get the required credit limits, in order to facilitate the funding. This makes it a “shopping around exercise“ to find the providers that are able to...
- 07 Feb
Early Stage Funding For UK Startups Drops
Early stage funding for UK startups dropped by 15% in 2018, according to data published in Yahoo Finance by Beauhurst, a consultancy that track equity funding. Overall equity funding in the UK reduced to £7Bn in 2018, down from £8.6Bn in 2017 and there was a 10% decline in the number of deals completed. This is a concerning drop that may create a need for alternative forms of startup...
- 21 Dec
Which Factoring Companies Will Fund Startups?
There is plenty of miscommunication going on around the industry. We were recently contacted by a newly formed startup company that had spoken to a few factoring companies and had been told that they needed around half a year's trading behind them in order to secure invoice finance.This may be the case for some factoring companies, but there are others that will happily accept new startup...
- 14 Nov
Factoring For A New Start Haulage Company
This is an interesting case that demonstrates just how flexible some UK factoring companies can be. We have just arranged a recourse factoring facility for a new startup haulage company handling frozen food. The company is operated by a foreign national, ex-driver, that was NOT a homeowner. These aspects may have posed a problem for some invoice finance companies.SEE THE PRICE OF...
- 31 Oct
Further Help For Startup Businesses
As an conclusion to our free business startup guide, below are some useful further resources and sources of further information, help and advice for new startup businesses:FundInvoice are able to help you find a range of different business finance services from business loans, to receivables financing, export finance and trade (or import) finance.Please call Sean on 03330 113622 or request a call...
- 30 Oct
New Startup Business Checklist
The following business startup checklist is a high level list of the issues and items you need to think about when starting a new business.It is not in any order of importance and some of the items on the list are at a very high level, so there may be a number of subsidiary issues that you have to address under any of the following points.However, it should give anyone starting a new business...
- 09 Oct
How To Set Up Your Business Startup
The first thing to say is that you will likely need the help of an accountant, and perhaps a solicitor to help with setting up your business. This article gives some general information based on our own experience, but your situation may vary.As I mentioned in the first part of this business startup guide, the key to a successful venture is having a product or service that is in sufficient...
- 05 Oct
Marketing A Startup Business
The production of a marketing plan is at the core of any new startup business, it is likely to be a standalone sub-plan within your overall business plan.How you are going to promote and market your products, or services, will determine the volume of sales that you achieve, and most likely the financial success of your business. You don’t have to do the marketing planning and delivery...
- 07 Sep
Producing A Business Plan For Your Startup
Writing a business plan is critical to launching a startup business. It allows you to clearly set out your business idea, set goals and measure progress against those goals.You might be interested in the top 3 pieces of advice for new startups that we heard from fellow entrepreneurs.A business plan is a written document that sets out the objectives and strategy for your business venture,...
- 30 Aug
Validating Your New Business Idea
In the last post in this series the Free Business Startup Guide, I covered developing a unique business idea. This post concerns validating that business idea. This means how to check that it is likely to be successful with demand from customers.This is one small step in setting up your own business, but it is critical to its future success, hence it has this post dedicated to it.GET ADVICE ABOUT...
- 29 Aug
Free Business Startup Guide
This is a free business startup guide that gives general advice about starting your own business. It's not comprehensive, and professional advice should always be sought from an accountant and/or solicitor.This guide takes you through a number of areas that you need to think about if you are starting your own business. It is based on our own experience of launching our own venture.GET BUSINESS...
- 12 Apr
Business Loans For New Start-Up Companies
Business loans can be provided to new start-up companies. There is an appetite for lending to startup companies, whether or not the Directors are homeowners.This may be good news if you are thinking of starting a company and need some capital to get you up and running.It is not the case that all lenders will provide loans to startups. Funding Circle for instance, state in their investors guide,...
- 05 Apr
Interest Only Loans For Start-Ups
Finding finance for new start-up company can be difficult, but there are funders within the market that can help.We have just received notification from Nucleus Commercial Finance, one of our funding panel, that they have launched “Start-Up Finance”, a specialist interest only loan product for new start companies.The new company can borrow between £25,000 and £20 million, secured against...